by Collinson FX
Elliott 7’s - 2013 Auckland Cup, Day 3
Collinson FX market Commentary: May 15, 2013
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Markets continued the bull run which seems to be mindless considering economic fundamentals. It appears that the Fed has overwhelmed all sensibilities by flooding the markets with ever increasing liquidity but there is a limit.
The Fed is fast becoming 'too big to fail'. The EUR fell back to 1.2930 and the GBP 1.5225. Commodities took a hit with Chinese demand flagging and data so good that even the believers starting to doubt. The statistics defy logic with the uniformity and should be questioned because of the source.
The peripheral currencies continue to suffer the risk aversion trade with the AUD now below 0.9900 and the KIWI 0.8180.
There is more downside available as the Dollar surges from a risk prospective rather than the vaunted economic recovery. Turmoil will spread to equities.
Collinson FX market Commentary: May 14, 2013
Rumours swirled in the US, that the massive Bond Buying program the Fed has blessed the markets with, may be coming to an end. The Fed is said to be dipping their collective toe in to the water to test the temperature. This is a signal of moves to cut the $85 Billion monthly Bond Buying that has been referred to as QE Infinity.
The reason Bernanke launched the continuous stimulus package was the dire state of the US economy and the recent improvement may tempt the Reserve Bank to return to reality. The problem is that the economy has stabilised but there are more challenges ahead, especially from Europe. The Dollar continued to rise after the G7 endorced the Bank of Japans QE program which has seen the JPY hit 102.00 and charts say may see a move to 105!.
The EUR was steady at 1.2975 and the GBP below 1.5300. Hard commodities drifted lower with the rising Dollar, which has pushed the associated currencies back.
The AUD has well and truely breached parity, trading 0.9950 and the KIWI slipped to 0.8240 despite House Sales rising 25% tempered by a flattening in prices. In the US Retail Sales rose 0.1%, beating expectations, which has improved the GDP growth outlook. Chinese Industrial Production grew 9.4% and Retail Sales rose 12.5% continuing a trend of bullish, consistant and doubtful economic data releases.
The trends are positive but equities have exploded because of Monetary policy and any contraction will result in a massive correction which will hit risk appetite hard! Mid-May
Collinson FX market Commentary: May 13, 2013
US Equities closed on a new record high compliments of massive liquidity flooding markets looking for a return. The US Dollar surged again as a result of relative confidence in the US recovery vis-a-vis the other Economic Zones.
The EUR slipped below the psychological 1.3000 and the GBP floundered to 1.5350. Commodities took a bath as a result of the surge in the USD and perhaps a reflection of softening demand.
Consequently the associated currencies suffered with the AUD breaking parity and the KIWI under 0.8300. May rolls on without any adversity in the Equity markets with New Yorkers declining the opportunity for a holiday!
A quiet week in terms of economic data will be followed by a very busy week coming. Growth numbers in the EU and Inflationary data will be a guide to the state of any recovery in the 'submerging nations'!
The US will have a close look at the vital Housing sector and the consumer with Retail Sales releases. A very busy week so be prepared for some volatility especially with the currencies perched on some very suspect technical levels!
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