Collinson FX Market Commentary - Oct 6 - More gains for Equities

by Collinson FX on 7 Oct 2015 Collinson FX Market Commentary - Oct 6 - More gains for Equities Click here to find out how to get Collinson FX's free iPhone app

Equities continued to book gains across global markets due to weak economic data and the contradictory impact that has on corrupted markets. Central Bank QE globally has created massive asset bubbles and indebtedness prevents a return to normal monetary policy.

The IMF reduced their over optimistic growth forecasts in line with reality. Currency wars forced the U.S. Dollar lower, reflected in a rise in commodities, while the GBP hit 1.5220 and the EUR attempted to breach 1.1200. The EUR remains inherently debased because of fundamental issues facing the single market with independent fiscal markets. This situation is further debased by ECB monetary policy and QE.

The RBA left interest rates unchanged, as expected, observing fragile international economic conditions. The Bank has telegraphed future cuts but the next move may be a future rise as the lower currencies works it's magic on the local economy. This was reflected in a strong move north, as the AUD spike to 0.7150, while the NZD quietly pushed beyond 0.6500.

Collinson FX Market Commentary - Oct 5 - Equities surge
Oct 5 - Equities surged overnight due to the almost universal belief that the Fed will not raise interest rates and the ocean of liquidity will continue to flood markets. European and U.S. Market PMI for services disappointed expectations and EU Retail Sales were zero.

There is little on the economic data front to suggest an improvement in global conditions, thus QE will remain, while asset bubbles stretch. The EUR drifted to 1.1170, while the GBP slipped to 1.5150, after lower Services PMI. Commodities managed to stage a recovery, pushing the NZD towards 0.6500, while the AUD will look to test 0.7100 with the RBA leaving rates unchanged.

The RBA statement will have more impact than the lack of action and this will drive currency direction today. The Transpacific trade agreement signed overnight will bolster trade but this definitely a case of ''the devil is in the detail'!

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