by Collinson FX
- Etchells Invitation Series - November 12, 2013
Collinson FX market Commentary: November 16, 2013
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Equity Markets continued to break new ground with assurances from the Fed nominee, Janet Yellen, that QE Infinity will continue for the forseeable future.
Interest rates will continue to be kept at unnaturally low levels to prime the pump of the US economy. The continued flood of liquidity pours into equities and undermines the Dollar. This will be the great equilizer as the value of the USD collapses, and with it, the wealth of Americans. The ailing Eurozone even managed gains, with the EUR hitting 1.3500 and the GBP back to 1.6110.
The coming week will look closely at growth, confidence and manufacturing in Europe. The US will look at Housing and Manufacturing, as will China.
Central Bank activity continues to dominate markets and promote asset values boosting associated currencies. The AUD rose back to 0.9365 with improving consumer confidence. The KIWI also booked gains to 0.8330 as economic fundamentals continue to improve.
- Etchells Invitation Series - November 12, 2013
Collinson FX market Commentary: November 15, 2013
All eyes were on the confirmation of Fed nominee, Yellen, appearing before congress. Yellen reiterated her dovish philosophies toward monetary policy and confirmed her support for stimulus.
She observed the US Economy was 'operating below potential' thus reinforcing the QE Infinity policy. Yellen also noted that there was 'no evidence of an asset bubble on stock markets', but it is hard to imagine markets trading at these record breaking levels, without the epic flood of Fed liquidity!? Great for Wall Street but is this trickle down effect on Main Street?
The Dollar remains under continued assault and trades at EUR 1.3475 and the GBP 1.6075, despite anemic economic growth, from the Eurozone. NZ Manufacturing PMI rose to 55.7 from 54.2 and Consumer Confidence rose to 5 from 2.9.
The good, local economic news was contradicted by a fall in Retail Sales, but remained positive with the local currency trading around 0.8250. The AUD trading just below 0.9300 with some support for commodities. Central bank activity and intended activity remain the main driver of equities, currencies and bonds.
Collinson FX market Commentary: November 13, 2013
Speculation is rife across the US markets fueled by improving economic data and predictions of an easing in QE Infinity. Non-Farm payrolls added more jobs than expected and GDP growth also moved north.
The commencement of tapering may begin by years end but it would be easy for Bernanke to give the hospital pass to Yellen. She is a Dove and is unlikely to move rates up but will face the problem of easing/withdrawal and this will surely test her skills.
The Dollar rose with the speculation of tapering, with the EUR 1.3440 and the GBP 1.5910. US 10 year bonds approached 2.8% as the bond vigilante's do what the Fed fails to. Previous expectations of an end to QE saw rates rise to 3% and this would be the next target. Any break out would be a serious red flag. Commodities currencies seem to be suffering risk worries with the AUD back below 0.9300 and the KIWI 0.8200.
NZ House prices continue to rise, with sales, so an easing in the pressure on the currency would be welcomed by the RBNZ. Look at economic data and speculation of Central Bank activity to drive markets as equities test record highs.
Collinson FX market Commentary: November 12, 2013
Equity markets hovered around record levels with rising debate over the continued QE Infinity stimulus. The Fed has continued to pump $85 Billion per month into the US economy, which has created the extra-ordinary bubble that will now be tested.
The parameters that were set by Bernanke, including employment and growth, are coming close to being satisfied. Employment remained steady last Friday but Non-Farm Payrolls added over 200,000 jobs, beating expectations. The Holiday season is fast approaching so the appetite of the Consumer will now be under the microscope. It remains hard to see the Fed moving before the new Fed Chairman assumes control in the New Year.
The EUR remains steady, trading 1.3400, with little happening in the single market to drive confidence. Commodities remain bid, as the value of the Dollar dilutes, but remain vulnerable to risk. The AUD traded around 0.9350 and the KIWI 0.8230.
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