by Collinson FX
Wired - 2013 Auckland Cup, Day 2
Collinson FX market Commentary: June 4, 2013
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When Bonds and Stocks both sell-off you tend to find bad news is bad on the economic fundamental front. We are still experiencing the the irony of 'bad news is good!' due to the corruption of markets by Bernanke and Co.
The ISM Manufacturing contracted at the worst rate in four years, falling below 50, to 49 showing Manufacturing is struggling. Construction was positve but was lower than expected and the weak data resulted in a risk-off trade with a fall in the Dollar. The EUR rose to 1.3080 and the GBP jumped to 1.5335 with steady Manufacturing PMI across Europe.
The AUD was a major beneficiary of the slide in the USD, rallying strongly to 0.9775 and the KIWI breaking back to 0.8100.In Asian trade yesterday the AUD had taken a pasting, after Chinese Manufacturing PMI contracted back to 49.2, falling below 0.9600 and the NZD dropped to 0.7950.
Fear was spreading after the massive equity/bond sell-off Friday in the US, but was arrested when markets decided the bad news would result in a further continuance of QE.
The AUD remains extremely vulnerable as a global risk target aggravated by the rise in weak local economic data and the political turmoil created by the mortally wounded, and soon to be gone, Labor regime!
Look to the plethora of US data and Central Banks for market direction to be manifested in Bonds, Stocks and Currencies!
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