Collinson FX Market Commentary - Mar 5 - USD takes down Kiwi and AUD

by Collinson FX on 5 Mar 2017 Collinson FX Market Commentary - Mar 5 - USD takes down Kiwi and AUD

Mar 5 - Yellen (Janet Yellen, Chair US Federal Reserve) confirms a return to 'normal' monetary policy, where rates rise to prevent inflation due to growth, rather than cuts to encourage growth fuelling asset bubbles. Equities have charged, in search of return, but may now be supported by corporate growth and profit! EU Composite and Services PMI data was solid, but not inspirational, allowing the EUR to bounce to 1.0600.

The rising Dollar has hit the commodity currencies hardest, with the NZD now testing the big figure of 0.7000, while the AUD holds below 0.7600. The coming week is massive for global economic data with important interjections from Central Banks.

The RBA and ECB both announce monetary policy, with no rate changes expected, although rhetoric may become more hawkish.

Collinson FX Market Commentary - Mar 3 - USD continues to climb

March 3 - The US Dollar continued to make ground, following Fed President Lael Braenard confirming a rate rise anon, while noting he is considered a dove. This was reflected in currency moves, with the EUR falling to 1.0500, while the Yen moved to 114.50.

EU Unemployment data remains challenging, holding around 9.6%, while the CPI holds around 2%. EU Unemployment is almost ingrained and institutional problems need structural solutions, not millions of refugees draining welfare/education/health resources, adding little to growth. The unemployment conundrum is only overshadowed by the fiscal dislocation.

The surging Dollar hit the commodity currencies, with the NZD plunging to 0.7050, while the AUD crashed to 0.7550 unassisted by weak Trade data. The Dollar remains the determining factor.

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Collinson FX Market Commentary - Mar 2 - US Interest rate rise likely

Mar 2 - Markets surged overnight, with the successful Trump address of both houses of congress, as the DOW surged over 300 points. The massive rally in equities, to new record breaking levels, was also supported by a rally in the Dollar. The Yen moved all the way to 113.50, while the EUR slipped back to 1.0550, despite some stronger than expected German inflation data.

Trump's speech was roundly endorsed and confirmed deregulation, tax reform and healthcare measures. Fed President Dudley was very hawkish, in his media commentary, raising the odds of an interest rate rise in March. The rising reserve hit the KIWI, which fell back to 0.7100, while the AUD traded 0.7670. The relative strength of the AUD was sustained by a stronger than expected GDP number.

The December quarter jumped 1.1% (2.2% p.a.), correcting the surprise contraction in the previous quarter, reflecting stronger economic performance and rising commodity prices. Confidence in the US markets is surging and is being translated in economic data. The Trump rally continues!

Collinson FX Market Commentary - Mar 1 - USD expected to rise

US markets await the Trump address of both Congressional institutions, all the while economic indicators welcome his policies, with the Chicago Purchasing Manager and the Richmond Fed Index both bullish. US GDP was static, around 2.0%, but this historical measure will likely improve.

European economic data remains negative, but the rising tide lifts all boats, giving the US the lead role. The EUR trades around 1.0600, while the Yen pushed below 112.00, but the Dollar is likely to reflect positive sentiment from the Trump address of Congress.

NZ Trade data was flat, with a rise in both Exports and Imports, but a stronger KIWI has not improved the terms of trade. The NZD held above 0.7200, while the AUD floundered below 0.7700, mired in a political quagmire. All eyes remain focused on the Presidents address of Congress.

Collinson FX Market Commentary - Feb 28 - Rates rise tipped for March

Markets were steady, to open the week, with both equities and the Dollar treading water. All the focus is on the Presidential address, to both houses of Congress, known as the 'State of the Union' in all but the inauguration year. Trump is expected to reveal his agenda over the next year, outlining plans for tax, deregulation and Healthcare reform.

The Budget will also come in to focus, with increased spending in the military, while savings may be also suggested. Trump met with the Governors and assured them of controlled Federal spending, indicating a 'lean and accountable' bureaucracy, providing more decentralisation to the States. Durable Goods Orders jumped 1.8%, while Pending Home Sales contracted 2.8%, although remained stronger annually.

The Yen traded 112.30, while the EUR pushed above 1.0600, despite weak Consumer Confidence data. The Fed are likely to raise rates in March, which should support the Dollar bull run, while equities lap up the Trump rhetoric. The KIWI holds above 0.7200, while the AUD struggles to regain 0.7700, with reserve activity likely drive click here and here Or for the latest update click here

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