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Collinson FX Market Commentary- Apr 21 - NZ Inflation contracts

by Collinson FX on 21 Apr 2015
- Day 1, Jack Tar Regatta 2015 Ivor Wilkins/Offshore Images http://www.offshoreimages.com/
Collinson FX market Commentary: April 18 2015 - Oil prices surge

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Apr 21 - The Chinese joined the currency war with monetary stimulus, lowering the Reserve Requirement Ratio (RRR), allowing an expansion of liquidity. This was a trigger for a big rebound in global equities and the US Dollar. The EUR dropped back to 1.0720, while the GBP slipped below 1.4900, the fight to the bottom is on! The Greece situation remains critical, with Greek PM Tsipras, ordering local Government finances back to the Central Bank.

This was a consolidation of funds to allow payment of Government bills and debt repayments to the IMF. This problem is far from over.

Commodity currencies surrendered some of last weeks huge gains, with the AUD retreating to 0.7710, while the KIWI slipped below 0.7650. NZ inflation contracted, with CPI coming in at minus 0.3% for the quarter, reflecting the parlous state of growth in the 'rock-star economy'! Economic data remains weak globally and Central Bank policies counter this with massive liquidity.

The manipulated currencies will thus trade in distorted markets and be subject to monetary policy. The Greek crises continues to undermine the single market.

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