Collinson FX Market Commentary - July 30 - US signals Rate Rise

by Collinson FX on 30 Jul 2015 Collinson FX Market Commentary - July 30 - US signals Rate Click here to find out how to get CollinsonFX's free iPhone app

July 30 - The FOMC confirmed that an interest rate rise was in the pipeline for later this year. The Fed observed the Labour market had improved to such an extent that a rate rise is probable. The Chinese stock market crash and the Greek crises had both threatened the global economy which could negatively impact the US.

The Chinese crisis is far from over, but perhaps this will not contaminate the greater economy, thus global markets. The US appears to be moving to raise rates but the Dollar did not reflect this as they left rates unchanged. The Fed have been reluctant to commit and have allowed excuses to permeate their language.

The EUR hovered around 1.1000, while the GBP traded around 1.5600. Commodity demand remains weak but the associated currencies continued to rebuild, with the AUD breaking back to 0.7300, while the NZD pushed above 0.6650. Central Banks, more particularly the Fed, control currencies and bonds which react to economic data and global economic crises. There appears to be a plethora of reasons to defer any interest rate rise!?

July 29 - Stock markets rebounded after a week of sales ruminating from Chinese panic. The said market consolidated during yesterday's trade and gave some confidence to global equities. It is far from over and there will be more complications. The Dollar rebounded against the EURO, trading 1.1050, while the GBP hit 1.5600 supported by the prospect of interest rate rises.

Commodity currencies were relieved by the reported recovery in China, with the AUD breaking back above 0.7300, while the NZD pushed above 0.6650. The markets have been grossly short commodity currencies, for a very good reason, but now are paying the price! Domestic economic data will be a major driver of markets while keen eyes train on China!

July 28 - Chinese equities fell off another cliff to begin the week sending jitters through global share markets. After another testing week across global markets the Chinese collapse has sparked fear on markets. Chinese Government intervention has made some difference, but a fall of 8.5% on the day, worries many!

Chinese contraction is impacting corporate sales, to those exposed to Chinese markets, impacting European and US earnings. The Dollar was hit overnight, with the EUR jumping to 1.1100, while the GBP moved to 1.5550. Commodity demand remains under pressure and so the associated currencies did not receive the boost from the flagging Dollar.

The AUD was tenuous, trading 0.7270, while the NZD looks to secure 0.6600. The focus appears to be on how far China will fall and how much impact the share market collapse will impact the greater economy....time will tell!?


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