Collinson FX Market Commentary - Sep 4 - AUD in tenuous state

by Collinson FX on 4 Sep 2015 Collinson FX Market Commentary - Sep 4 - AUD in tenuous state Click here to find out how to get CollinsonFX's free iPhone app

Sep 4 - Markets settled down overnight with little in the way of extreme volatility as seen in recent weeks. Oil settled around $47, while European Composite PMI is mixed, not helping the single market. The ECB left interest unchanged but QE remained at full speed, causing the EUR to fall back to 1.1110, while the GBP drifted to trade 1.5250. U.S.

Employment continued to show signs of recovery with the Challenger Jobs report and Weekly Jobless Claims improving. U.S. Factory Orders contracted, while composite PMI expanded slightly. Weaker economic data, in the form of Retail Sales, hit the AUD, once again testing 0.7000.

The tenuous state of the AUD failed to deter the NZD, which jumped towards 0.6400, and stretched the cross rate. Commodities are mixed and daily economic data will drive currencies in the lead up to the all-important Fed decision mid September.

Collinson FX Market Commentary - Sep 3 - AUD teetering
Sept 3 - Equities rebounded again overnight supported by a positive Biege Book. The 'BB' found moderate to modest growth and improving employment and Manufacturing in most regions. This is positive news but is it strong enough for the Fed to raise interest rates in two weeks time?

The Dollar was steady, failing to give any monetary hints, with the EUR trading 1.1230 and the GBP 1.5300. Australian GDP missed expectations, coming in at 0.2% for the quarter, sorely testing the AUD. The AUD is teetering on the edge of a precipice, with a massive technical support around 0.7000, but consolidated and built support to trade 0.7030. Australian Trade and Retail Sales today will offer further fodder.

The KIWI looks to trade 0.6330 despite weaker commodity prices. Markets remained focused on economic data but the Feds actions will be the big driver of currencies.

Collinson FX Market Commentary - Sep 3 - RBA doesn't budge
Sept 2 – China again set the scene for violent global moves in equites. Global equities were headed for losses in the order of between two and three percent! Chinese Manufacturing PMI contracted once again, which lead to speculation that GDP growth could contract further from the projected 7%, to below 6.5%!

The spike in Oil prices corrected with a plunge to $45/barrel and may resume the downward recent moves.The IMF are reviewing GDP growth targets in emerging and developed nations with all the global upheaval tripped in China. The EUR bounced to 1.1290, while the GBP held 1.5300, but both remain hostage to the Fed. The Fed has been touting an interest rate rise this month, returning markets to some semblance of normalcy, but these are pipe dreams.

The RBA left interest rates unchanged, keeping the powder dry, with a view to further cuts when the Fed declines to increase rates. The traditional Melbourne Cup Day cut is now a prospect! The AUD crashed to 0.7020 and is in tenuous technical territory, hit by Chinese economic data, rather than Central bank activity. Chinese growth directly translates in to commodity demand and this is savaging the associated currencies. The resilient NZD held 0.6300 but will be impacted. The avalanche of data is driving equities lower while bonds hold steady. The VIX volitility index may surge again this week hitting currencies and equities.


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