by Collinson FX
Collinson FX market Commentary: 13 April 2012
Abu Dhabi leads the pack around the first mark - Volvo Ocean Race Auckland - Start March 18,2012
Markets regained some more of the recent losses on the back of yesterdays gains. Equity markets rallied strongly growing risk appetite with greater belief in global economic growth lead by China and the USA.
Chinese growth is expected to come in around 9% above recent predictions. In the US the Trade Deficit contracted much more than expected by 12.4% boosting hope for growth. European markets gained despite Italian Bonds hitting new highs haunting markets with the stench of the debt crises manifesting.
The EUR continued to rebound testing 1.3200 and the GBP 1.5960 with EU Industrial Production holding steady albeit negative. In the US the Fed's Vice-Chair, Janet Yellen, endorced record low interest rates until 2014 thus ensuring cheap money with record liquidity until the cows come home. The access to cheap money boosted equity and commodities and pushed the Dollar lower. These moves offset the Jobs front with weekly jobless claims rising by 13,000.
Commodity gains pushed the AUD higher with some good news locally on the Employment front. Australian Unemployment remained at 5.2% after predictions off a rise. The currency rallied back to 1.0430 and also boosted the KIWI rallying to 0.8260. Markets will keep a close eye on data with growing interest in inflation.
Collinson FX market Commentary: 12 April 2012
After a week of losses, equity markets returned to the positive as risk appetite stabilised boosted by Alcoa.
Alcoa kicked off the US earning season beating all expectation revealing an increased global demand for Aluminum. This has been an industry under great pressure recently with prices collapsing but the record low prices may have found an equilibrium. Good news for Aluminium producers globally with many threatened closures in Australia and NZ. The earnings season has halted the risk aversion sentiment which tested global growth.
In the US the Biege Book release showed modest to moderate growth and a fairly steady overall snapshot. US Import prices rose more than expected by 1.3% and Weekly Mortgage Applications also fell 2.4%. European markets staged a recovery after the ECB spoke of the renactment of their Bond-Buying program and the skyrocketing Spanish bond yields subsided.
The EUR recovered to 1.3100 and the GBP hit 1.5900. Commodities also staged a rally with the AUD improving to 1.0305 and the KIWI 0.8180.
The Australian economy is under pressure with Consumer Confidence again falling further to 94.5 (-1.6%) after the Government attempts to produce a budget surplus thereby imposing their own austerity program.
Collinson FX market Commentary: 11 April 2012
Equity markets continued to tumble after the fallout from the bad Non-Farm Payrolls last 'Good Friday'. European equity markets crashed after further Bond scares shook stability and questioned the state of the EU.
Confidence in the ECB's ability to solve the EU debt crises has taken a hit. After the LTRO pumped in record amounts of cash into the banks to alleviate short term pressures and they in turn supported sovereign debt. The problem with the bonds not only remains but has degenerated. EU nations have continued to increase their debt to GDP and this will continue until the can balance their budgets to halt the borrowing. The problem is that debt is coming to a tipping point in terms of servicing and that is why markets are selling and bond rates are now reaching year long highs again.
The risk aversion spread to currency markets with flight to USD and JPY. The EUR dropped to 1.3080 and the GBP to 1.5850. Volitility hit commodities hard and the associated currencies with the AUD slipping back to 1.0260 and the KIWI 0.8140. In the US the economic recovery will be impacted as Europe slips into a double dip recession and spreads fear with possible sovereign default. Small business confidence in the US dropped with the spring recovery now under pressure. Developments from Europe will give makets direction with economic data being watched closely to gauge the environment.
Collinson FX market Commentary: 10 April 2012
The long Easter weekend ensured a quiet close to the week on the Markets.
The big news for the week was the reluctance of the Fed to participate in further QE which set equity markets back. The Non-Farm Payrolls missed targets by some way Friday coming in at 120,000, well shy of the expeactations of 205,000. Equity markets in the US were closed so the impact will not be felt until markets open again this week. The EUR ended weak around 1.3090 and commodity currencies posted some slight gains.
The AUD rose above 1.0300 and the KIWI had a look at 0.8200. Economic news this week will drive markets with inflation numbers drawing attention and industrial production in Europe and China. The correction to the downside may have further distance to travel unless the mood of markets improves.
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