Collinson FX Market Commentary- Apr 22 - Testing parity with AUD
by Collinson FX on 22 Apr 2015
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Collinson FX market Commentary: April 22 2015 - Testing parity with AUD
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Apr 22 - The equity rally stalled in the US after Asian and European markets soaked up the previous days moves. European markets ignored the ongoing Greek tragedy unfolding and the dip in ZEW confidence from Germany and the EU. Debt/GDP also crept up to 91.9, from 90.9, reflecting the underlying intrinsic economic crises over the single market.
The Dollar stalled and this was reflected in the EUR, which was flat on 1.0735, while the GBP traded 1.4925. New York Fed President Dudley, reiterated the economic recovery scenario, while cautioning that interest rate rises were data dependent. The RBA Governor confirmed interest rate cuts were likely on an overvalued currency, which drove the currency back to 0.7700, while markets are now talking a floor of 0.7000.
The NZD was impacted but not to the same extent, drifting back to 0.7650, while again testing AUD parity.
The RBNZ Governor has been wrong throughout his reign. He was raising rates to combat a housing bubble, blunting the economic recovery, but has been negligent in addressing the currency wars ongoing with all NZ trading partners. Wheeler needs to get with the program and fast before trade impacts the economy further.
Collinson FX market Commentary: April 21 2015 - NZ Inflation contracts
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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