Collinson FX Market Commentary - June 4 - Central bank wars dominate

by Collinson FX on 4 Jun 2015 Collinson FX Market Commentary - June 4 - Central bank wars Click here to find out how to get CollinsonFX's free iPhone app

June 4 - The Fed's Biege Book observed 'moderate' and 'modest' growth impaired by a stronger Dollar. This is code for anemic growth and the resurgent export market has been hit by a stronger Dollar after promises of interest rate rises from the Fed. Yellen will consider this yet another reason not to raise rates this year because is it hard to swim upstream!?

Global Central banks fight the currency wars and this impacts the retarded recovery from individual economies. Domestic markets remain challenged and reliance upon lower currencies to boost exports is common and ineffectual. Greek debt negotiations continue to threaten European markets but fails to impact the currencies due to Fed prospects. The GBP traded 1.5315, while the EUR hit 1.1250, charged by improving retail sales and composite PMI data.

Commodities drifted and impacted the associated currencies, with the NZD trading 0.7125, while the AUD retraced from 0.7800. Australian economic data is on the improve, with a rise in GDP growth of 0.9%, for the quarter. The consumer is improving, with stimulus both fiscally and monetarily, while exports surged with a lower AUD$.There is no bullish global economic data, with much of recent releases relying on Central bank interference and currency advantage, so look out for Geo-Political logs!

Collinson FX Market Commentary - June 3 - Aussie RB sits on fence
June 3 - The Dollar was hit hard overnight as the reserve plunged pushing up currencies and commodity prices. The EU finally displayed some signs of life, with a rise in CPI inflation data, reflecting the impact of ECB Monetary Policy. Many pundits were focused on Greek debt negotiations in Berlin, which must come to a conclusion, with a hard deadline Friday.

The Greeks have submitted a 'final plan' but IMF/EU negotiators insist on economic conditions being met!? The slide in the Dollar was reflected in the EUR, which jumped to 1.1180, while the GBP hit 1.5350. Oil led the commodities higher, which boosted the associated currencies, accentuated by the fall in the USD. The NZD jumped to 0.7175, while the AUD spiked towards 0.7800!

The RBA left interest rates unchanged (2%) and the focus was on the commentary. The Bank observed that the global economy was growing 'modestly' (code for flat) while Central Banks continued accommodative monetary policy to support borrowing and spending. The RBA noted weakness in the AUD and talked of more to come due to a massive collapse in the all-important commodity prices. They left rates unchanged, but committed to record low interest rates, to support the challenging economy.

Global markets are anaemic, supported by historically low interest rates and massive liquidity, but still inflation and growth remain weak. Look to economic data to drive markets, culminating in US jobs data, by the end of the week. The Greek crises, has potential to upset markets, along with Geo-Political developments in the Ukraine and the Middle East.

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