by Collinson FX
Image of the day Dragon Boat Nationals 2013 - 7-8/01/2013, Botany Bay Sailing Club, Sans Souci
Collinson FX market Commentary: January 10, 2013
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European markets continued the negative trend with the release of a huge volume of economic data. EU Retail Sales fell along with Consumer Confidence. EU Business, Industrial and Economic Climates have all taken a cold turn with Employment hovering at 11.8%. Retail Sales continued to fall and German Factory Orders slipped 1%. These are all headline economic data releases and all show an Economic Zone entrenched in recession, which will be difficult to recover from.
In the US, NFIB Small Business Optimism remained steady at 88 but still reflects the weakness in this all-important sector. The Equity markets continued to return last weeks gains with the prospect of the earnings season kicking off with Alcoa. The earnings season is not expected to be over bullish as Corporate earnings will reflect the tough economy and lack in investment.
The EUR returned recent gains to trade back at 1.3065 and the GBP 1.6050. The Australian Trade Balance continued to deteriorate as global demand weakens although the relative strength of the economy and attractive interest rate differentials supported the currency just under 1.0500.
The KIWI rides along with the 'least worst' trade holding just over 0.8300. Earnings and Economic data will continue to dominate the market direction this week but watch for Political developments which could cause major changes in conditions.
Southern Cross American owned-1 - Tall Ships and Classics regatta in the Bay of Islands
Collinson FX market Commentary: January 6, 2013
The New Year rally continued at the close of the week sparked by the Fiscal Agreement in Congress. The reality will sink in and markets will look at the next round with the Debt Ceiling negotiations very close on the Horizon.
The fiscal irresponsibility will drive the the US to the edge and any spike in interest rates will put them over. The Fed indicated a propensity to begin to raise rates later in the year if conditions continued to improve. This has given some backbone to the USD pushing the EUR back to 1.3070 and the GBP 1.6060. This did not effect the commodity currencies as confidence exploded and pushed commodity prices north.
The AUD looks set to test 1.0500 although the KIWI receded from initial gains to settle above 0.8300. This coming week is a huge week for Economic data releases in Europe, the US and Asia which may well impact daily, especially with any surprises. ECB and Bank of England rate decisions will monitored closely later in the week. Political developments will drive the undercurrent of sentiment.
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