Collinson FX Market Commentary- May 16 - Doubts on US recovery
by Collinson FX on 18 May 2015
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Collinson FX market Commentary: May 16, 2015 - Doubts on US Click here to find out how to get CollinsonFX's free iPhone app
May 16 - The important University of Michigan confidence report collapsed overnight, confirming doubts about the validity of the economic recovery in the US.
The number fell from 95.9, to 88.6, well below all possible expectations. Rising fears have been reflected in GDP growth and inflation reports and now is manifesting in the consumer. Retail is a crucial part of the economy and flagging fortunes will prevent any rise in interest rates from the Fed. The EUR jumped to 1.1450, while the GBP slipped to 1.5725, after massive recent gains.
The AUD dropped back to 0.8030, after a week of gains, while the NZD fell back around 0.7420. The coming week will be full of economic data release across global markets, highlighting growth, manufacturing and confidence. Expectations will not be high as recent trends have anemic.
Collinson FX market Commentary: May 15, 2015 - No news, so market rallies
May 15 - There was little out in the way of economic data overnight, so equities reverted to the norm, rallying strongly.
Good news usually means monetary constipation, while weak and accurate data, results in speculation of further monetary stimulus. The recovery never happened and now reliance on monetary policy belies fiscal ineptitude. The EUR hit 1.1400, while the GBP consolidated around 1.5750, boosted by EU disintegration. Chinese data has been benign and local political movements has driven the AUD locally.
The real issue has been the lack of real progress on the economic front. This has hit the inspirational local currency, retracing back to below 0.8100, while the NZD test the 0.7500 mark. There will be weak continuance, on the economic front, therefore providing further opportunity for monetary stimulus.
The ECB endorses QE while the world flows down the path of currency stimulus. There is an exception and that is paranoia revolving around housing from an indistinguishable RBNZ Governor.
Collinson FX market Commentary: May 14, 2015 - Aussie jumps
May 14 - Markets slipped overnight, with some profit taking, as little was going on in markets overnight. The Dollar also slipped with the EUR moving up to 1.1215, while the GBP jumped to 1.5675, supported by steady GDP growth and Industrial/Manufacturing production. The big news in Australia was the release of the Liberal Governments second budget.
As with budgets these days, most details were released prior to budget night, avoiding any surprises. This was a tactical budget designed to be 'fair' and palatable politically. The political advantage may position the Government for an early poll, or at least allow the threat, to pressure passage of legislation through the Senate.
The AUD jumped, driving back towards 0.8000, while the NZD was steady around 0.7350. NZ House prices continued to march north, in a hot Auckland markets, with heavy sales volume validated the rally.
Collinson FX market Commentary: May 13, 2015 - KIWI plunges
May 13 - Equities drove forward to start the week, buoyed by another attempt at monetary stimulus, this time from China. The Chinese cut interest rates, effecting a further stimulus, raising the bid in the global currency war. This allowed a recovery in equities after a non-plussed employment report last Friday.
European markets were considered and the EUR traded 1.1150, while the GBP continued to reflect conservative Governance, trading up to 1.5600! Markets confirm and encourage fiscal rectitude, as seen in the UK, while monetary support should be just that.
The KIWI plunged overnight to 0.7340, hit by recognition of economic reality, rather than any single economic revelation. The AUD slipped back to below 0.7900, but held ground versus the NZD, improving the cross. Central Bank activism remains central to market behavior, with depleted economic performance, controlling currency wars.
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