by Collinson FX
Fifties cross - 2013 Auckland Cup, Day 3
Collinson FX market Commentary: April 5, 2013
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Equities were shaken Friday after Non-Farm Payrolls crashed, disappointing many and reaffirming the weak economic recovery the US is enjoying. The new European Socialist experiment, engulfing the US, is failing and this is reflected in the Jobs numbers. The addition of 88,000 jobs is a sad understatement of the real employment situation which continues to deteriorate.
The reality is 500,000 people stopped looking for jobs and the workforce is at the lowest levels since 1979! The nefarious situation is confirmed by insipid statistics which do not correctly affirm the dire state of the US economy. The employment number is confirmation of this when it is measured at 7.6%, hardly an endorcement of the reality of the situation.
This will mean extended QE, which tempered the sell-off in equities boosting Bernanke's bubble! This supported the EUR which approached 1.3000 and the GBP which hit 1.5350. Surprisingly the addition of further liquidity hit the big Dollar but did nothing for the Aussie which dipped below 1.0400.
The KIWI held its ground and traded 0.8430. Economic reports will dictate market moves in the coming week but Political developments in Korea and Europe have the opportunity to hit risk markets!
Young 88s in lee of Browns Island 2013 Auckland Cup, Day 3
Collinson FX market Commentary: April 4, 2013
US equities retreated overnight, giving up the previous days gains on some weaker than expected economic data. The ADP Jobs report signaled an increase of 158,000 private sector jobs were created last month, below expectations. This is a pre-cursor to Friday's all-important Non-Farm Payrolls expected to show an increase around 200,000!
The Institute for Supply Management also drifted lower to 54.4 from 56 reflecting weaker economic conditions in the Non-Manufacturing sector. This came on the back of growing Eco-Political pressures in Europe and Asia. European markets remain under the spotlight with fallout from Cyprus still to be measured and continued political instability in Italy.
The EUR trades 1.2840 and the GBP 1.5150 with many nervous investors. Growing Political instability in Asian is also impacting markets with North Korea beating the drums of war but is it 'crying wolf?' The AUD was steady after some solid Trade Data reflecting improving conditions, with the currency holding around 1.0450.
New Home Sales fell 5.3% and Political Instability has become the norm holding back any concerted recovery.
The KIWI continues to trade above the 0.8400 level and will reflect risk events offshore.
Collinson FX market Commentary: April 3, 2013
The Bernanke Equity bubble continued to grow as equities reached further virgin territory. The sheer volume of liquidity being pumped through QE has overwhelmed markets looking for a positive return forcing them into equity markets.
The latest rally was sparked by a rise in Factory Orders (3%) although New York's ISM fell from 58.8 to 51.2. The string of improving economic data in the US is being tempered by contradictory evidence but the Bulls are taking the positives. Fed member, Lockhart, has hinted at reduction in QE as economic conditions improve this year but April is normally a very positive one for equities.
Be prepared for a substantial correction in May as technicals and fundamentals collide. European triggers will remain as conditions remain volatile. EU Unemployment rose to a new record of 12% and PMI all held record low levels. The EUR was weak trading 1.2820 and the GBP 1.5115. The RBA held interest rates at 3%, keeping the powder dry, with commodity prices contracting giving little impetus to the currency.
The AUD held 1.0450 and the KIWI moved to 0.8400 with an improving mix of local commodity prices. Markets will continue in this fashion, save any eco-political surprises from Europe or a dramatic reversal in major economic fundamentals.
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