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Collinson FX Market Commentary- March 30, 2013 - Almost calm in Cyprus

by Collinson FX on 30 Mar 2013
MRX - 2013 Auckland Cup, Day 3 © Richard Gladwell http://www.richardgladwell.com

Collinson FX market Commentary: March 30, 2013

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Cypriot Banks opened for the first time since the Banking crises engulfed Europe and sent shudders around the globe.

There was relative calm as strict restrictions limited the amount of withdrawals thus alleviating some minor cash flow problems and avoiding a run! This settled markets with the EUR rising back to 1.2850 and the GBP approaching 1.5200 heading in to the long Easter break.

The Easter Holiday also coincides with the end of the quarter and saw US equities again hit new record highs. The Bernanke fueled equity bubble will continue with the Fed's QE Infinity supporting the rally. GDP numbers in the US lent support, rising from 0.1% to 0.4%. The expansion in the economy remains weak but still no reason to sell.

The Easter Break will give time to reflect and a huge week coming, will provide many economic reasons to buy and sell. Central Banks in the EU, UK, Japan and Australia all have rate decisions which will hold no surprises except in relation to the language employed. Mountains of Economic data globally, lead by US employment, will give plenty of directional challenges to markets.

The AUD looks set to open just above 1.0400 and the KIWI 0.8350 with support likely to be tested by any nasty European surprises! Happy Easter to all!



Collinson FX market Commentary: March 28, 2013
Tremors continue to emanate from Europe with instability spreading from Cyprus. The uncertain Political situation in Italy deteriorated further with some unfortunate comments from the leading candidate for leadership. A coalition can not be coalesced with the intransigence of the comedian Grillo's protest party. Bersani considered that only an 'insane person' would want to run Italy!

This sort of rhetoric hardly inspires confidence and Bond prices reacted accordingly. The Cypriot Banks are due to re-open tonight with all sorts of restrictions imposed to prevent a run. Rumours swirl of Russian withdrawals and transfers during the closures but why would this surprise? The EUR continued to suffer the pressures of the upheaval, trading 1.2760 and the GBP 1.5130. GDP Numbers confirmed recession engulfs France and most of Europe so the tunnel is a long and dark one.

US Markets dipped early on the European news but fought back in line with more promising economic data. Pending Home Sales fell 0.4%, dampening the promise of a leading sector recovery. The KIWI traded 0.8370 with demand for the higher yielding commodity currencies.

The AUD retraced from just under 1.0500 and still remains vulnerable to any risk-off action. All eyes will be on Cyprus tonight as markets go in to the long Easter weekend.


Collinson FX market Commentary: March 27, 2013
Fears over the Cyprus crises subsided in Europe despite Fitch Rating Agency putting them on a 'Negative Watch'. The Banks are scheduled to open again tonight and that will be strictly controlled to avoid a run on deposits.

It would seem unlikely anyone would be confident enough to leave their funds in there and this could be visually disastrous for other Banks in neighbouring troubled states. The EUR slipped back to 1.2850 and the GBP held steady around 1.5150. US equity markets rallied to new highs after the European crises became more controlled and with some strong domestic economic data.

The Case Shiller Home Price index exploded improving 8.1% although this was slightly tempered by New Home Sales falling 4.6% for the month.Durable Goods Orders rebounded to rise 5.7% reflecting a growing confidence from the Consumer although the confidence measure fell.

The return of confidence boosted the higher yielding AUD back towards the 1.0500 testing critical technical levels on the upside. The KIWI followed, aided by improving Trade Balances. Exports rose and Imports held steady continuing the improving, good economic news of late.

The NZD looks set to test 0.8400 levels in the very near future!


Collinson FX market Commentary: March 26, 2013

Precedents are being set in Europe as the Troika ignore their own rules once again. A new deal has been banded togeather to bail out the recalcitrant Cyprus which breaks foundation rules regarding deposits and bonds. Why do we care?

This undermines faith in the institutions designated to give just that! The adhoc and previously illegal actions of the ECB, have undermined faith in the concept. Currency unity is a completely stupid idea without fiscal union and who would trust the EU to run policy?

The EUR took a hammering after initial confidence slipped. The single currency dropped back to 1.2850 as the GBP treads water at 1.5150. The sitiuation in Europe has highlighted the vulnerability of the single market and the associated currency.

Higher yielding commodity currencies have survived the hit to market confidence with the AUD trading 1.0450 and the KIWI 0.8350. Analysis will reveal the parlous state of Europe and the impact on markets who also need a long hard look in the mirror!

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