Collinson FX Market Commentary - Aug 27 - US Equities roar back
by Collinson FX on 27 Aug 2015
- 2015 29er Worlds, Day 2 Robert Hajduk / shuttersail.com
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Collinson FX Market Commentary - Aug 27 - Click here to find out how to get CollinsonFX's free iPhone app
Aug 27 - US Equities roared back overnight, to a near record gain, compensating the recent correction. When technical corrections are defined as 10%+, which this is, analysts say this is healthy for the markets. The reason for the correction is less inspirational and certainly a cause for concern. Yesterdays rebound evaporated in the final hour of trade and closed terminally lower!?
Market volatility has overwhelmed national economic data release which have little impact as investors panic. The Feds William Dudley said interest rate rise were 'less compelling', which should have hit the Dollar, but did not. In fact the EUR collapsed to 1.1320, while the GBP crashed to 1.5470, contradicting rationale and reinforced turmoil in markets. The Chinese story evolves, like most western philosophy, reinforcing the credibility or lack thereof.
The Chinese Central bank enacted further QE but this did little to stimulate commodity demand. Oil has broken through technicals, trading below $40, with support levels now where? $10? Mortally wounded markets are experiencing a major rebound but these are more about cutting shorts and interventionist Central bank activity. If we look at the week in question a different view would be formed.
Doomed commodities remain reflected in the associated currencies, with the NZD falling to 0.6400, while the AUD tests 0.7100. These currencies were impacted by the rally in the reserve but remain fundamentally challenged by the reality of commodity prices.The Fed would be cutting, except it is hard to go below zero, so just expand the money supply (measured by bond rates)!?
Collinson FX Market Commentary - Aug 26 - Currencies whiplash
Global equities rebounded strongly after suffering the biggest losses since the GFC!
Rumours swirled, about concerted intervention by Central Banks into equity markets, with diverse arrangements of mutual inter-fundings and cross investments. Either way, things recovered strongly, especially in the top few US stocks. Bond yields spiked, contradicting any chances of a Fed interest rate rise,as predicted.
Currencies were whiplashed in the extreme volatility and the KIWI saw massive fluctuations. The NZD collapsed in the sell off and settled under 0.6500, while the AUD attempted to consolidate on 0.7150. The real surprise is the EUR, which jumped to above 1.1600, despite the economic doldrums, falling back to 1.1425.
There are no fundamentals to support a strong EURO but reflects the current state of the reserve. US markets recovered with some good news in terms of Consumer Confidence and New Home Sales. The underlying crises remains, as the big Monday crash, was mere icing on some recent slippage in equities.
Chinese equities shed a further 7+%, on top of Mondays -8.5% and marooned commodity prices confirm the parlous state of the global engine! This remains a problem, but Central Bank monetary policy and global debt, are the real issue in advanced economies.
Collinson FX Market Commentary - Aug 25 - Markets in panic, KIWI dives
Aug 25 - Markets were in turmoil to open the week. Chinese equities continued the melt-down, falling 8.5%, sending panic throughout global markets. The Dow fell 1000 points, at one stage, but rallied to to a mere collapse. Oil fell below $38, leading commodities to further lows, reflecting a demand collapse.
This should be considered a collapse in confidence in Central Banks and global monetary policy. The explosion of liquidity has destroyed the value of money and confidence, justified by a lack of inflation, enabling further indebtedness due to low service costs. The fight to the bottom on the currencies has destroyed creditabilty with the best performer, the EUR, which is the worst market! The EUR jumped to 1.1600, which is beyond crazy, but mirrors the reality of the once mighty Dollar.
Equities and commodities are reeling and are translated easily into the associated currencies. The AUD crashed to 0.7150, while the once resilient KIWI plunged to below 0.6500. Panic in the market has ensued and this happens to be 7 years from the GFC.
This is a serious situation and derives from Central bank ineptitude, which have acted on the lack of inflation, interpreted as positve but is a reflection of the lack of growth. There are many negatives, ignored by equity analysts, who have overinvested due to near free money!
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