Collinson FX Market Commentary- May 7 - Annual Bear Sale continues

by Collinson FX on 8 May 2015 Collinson FX market Commentary: May 7, 2015 - Annual Bear Sale Click here to find out how to get CollinsonFX's free iPhone app

May 7 - The annual bearish sell-off for May continues on the equity markets, encouraged by a commentary by Fed President Yellen, who observed that shares were overpriced. The ADP Private sector Jobs reported weakness in the employment market. Economic data has been weak globally and this was confirmed with Composite EU PMI data. Despite the data disappointment the single currency booked gains, with the EUR jumping to 1.1350, while the GBP regained 1.5250.

This extended to the AUD, which pushed to 0.7950, though the KIWI struggled to hold 0.7500. NZ Employment was steady, holding 5.8%, but doubts as to the validity of the 'rock-star' economic status are on the rise!

Australian New Home Sales drifted lower, while the consumer struggles, reflected in Retail Sales falling. Weak data and Summer sentiment are driving markets lower and this is likely to continue unless Non-Farm Payrolls surprise on Friday.

Collinson FX market Commentary: May 6, 2015 - Aussie joins currency wars
May 6 - Sell in May.. go away! The old adage is living up to expectations. European equities spun out overnight and Bonds issued warning signals. Holders of Government debt pressed the panic button and offloaded lucrative investments. ECB QE has stimulated the 'dead man walking' single market but cannot solve the fundamental issues plaguing the Union.

Economic data reinforces the weak state of the global economy and Central Banks do all the heavy lifting. Monetary Policy has been hugely loose, with masses of liquidity flooding markets, while failing to achieve goals. Monetary excesses should result in a surge in growth, with cheap money, which should be reflected in inflationary pressures. This has not occurred, with Central Banks pouring discounted money through banks who in turn reinvest in financial markets. Profits galore but no advantage to the real economy.

The RBA cut rates, as expected, to 2%. The commentary confirmed recent 'moderate' global growth, which is a euphemism for lack thereof! The RBA recognized the collapse in commodity prices and elected to join the stated currency wars.

'Major Central banks are stepping up the pace of unconventional policy measures' was code for the currency wars. Markets fully anticipated this move, selling in the previous week, thus leading to a profit bounce overnight. The AUD jumped to 0.7940, supported by markets interpretation of a relatively strong economy, while the KIWI traded 0.7540.

Collinson FX market Commentary: May 5, 2015 - RBA drops rate as predicted
May 5 - Chinese Manufacturing PMI continued to contract, falling to 48.9%, confirming weaker demand for commodities. This has a direct impact on demand hitting the associated currencies.

The NZD dallies around 0.7520, while the AUD slipped to 0.7830, assisted by a stronger reserve. Australian Job Ads improved and Building Permits expanded by 2.8%, some good news from an economy under recent fire, while NZ Commodity Prices fell 7.4%.

European equities booked gains, boosted by stronger Manufacturing data, in direct contrast to China. This supports improving confidence in European markets post-QE. US equity markets banked some gains and are looking forward to the all important Non-Farm Payrolls on Friday, while previews from the ADP and Challenger Jobs reports, should give insight.

The Dollar continued to recover, moving to EUR 1.1140, while the GBP slipped to 1.5110. The RBA is expected to cut interest rates, to at least 2%, while confirming a weaker economy and advocating for a lower currency.

Later today the RBA confirmed a rate drop to 2% and the AUD fell half a cent.

For more on Collinson FX and market information see:
www.collinsonfx.com and www.collinsonwealthmanagement.com

Countries: | NZ: 0800 338 838 | AU: 1800 143 415 | NY: 1888 6257 833 | UK: 0800 0285 834 |

Disclaimer: The details expressed in this website and accompanying documents or transmissions are for information purposes only and are not intended as a solicitation for funds or a recommendation to trade. Collinson Forex Ltd accepts no liability whatsoever for any loss or damages suffered through any act or omission taken as a result of reading or interpreting any of the information contained or related to this site.