by Collinson FX
Image of the Day Emirates Team NZ AC72 in flight putting on a show for the Friday night race fleet - October 12,2012
Collinson FX market Commentary: October 12, 2012
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Markets remained flat after an initial bounce in reaction to the falls experienced so far this month. October is a bad month psychologically with long memories of major crashes in this month.
Risk appetite was positive from the US with stronger jobs numbers although S&P downgraded Spanish debt to one level above Junk! No surprises there with many looking for the new bailout fund to be asked to act. The EURO rallied to 1.2950 and the GBP broke back above 1.6000 after IMF President LeGarde advocated further extension of time for Greece to right their Budget.
Time is not a bad thing although not to correct the corrupted but to prepare for the new life with the Drachma! The US falling Jobless Claims were skewed with one state not filing data. The AUD rose to 1.0250 after strong Jobs growth despite a rise in Unemployment due to many returning to participate.
The KIWI still traded flat around 0.8180 with local Consumer Confidence flagging. European debt and US Presidential politics remain front and centre.
Emirates Team NZ’s AC72 slides past Orakei Wharf on her way to start the tenth day of sailing since launch
Collinson FX market Commentary: October 11, 2012
Alcoa kicked the earnings season off beating earnings and profit expectations although prospects were tempered with global growth prospects. It is hard to see great strides with global demand impacting the Chinese engine room!?
Merkel reiterated her support for the single currency and the retention of Greece after a wonderful welcome by the ever temperate local populus. European markets remain concerned over the evolving debt crises and any doubt from 'Super Mario' would be a disaster! In the US, Weekly Mortgage Applications fell despite enormous refinancing at record low rates. Bernanke expects the flood of liquidity from QE Infinity to right the Housing market, stimulate consumer growth and enhance wealth but that would require free flow of credit.
The banks find far better reward in the yield curve to build balance sheet strength and profitability. The Fed's Biege Book saw the US economy expanding modestly with noticeable lack of comment on divergent recent Employment data. The serious profit downgrade continues to haunt equity markets after the IMF warned Europe of potential Capital flight, possible breakup and economic decline.
The Spanish PM visited France to assure markets and not for economic advice or the certainty of an economic meltdown would be a near certainty! Commodities remained well bid supporting the AUD at 1.0225 and the KIWI at 0.8160.
Risk aversion and global demand remains a huge challenge to these peripheral currencies. The EU train smash continues in slow motion while earnings in the US will compliment Political uncertainty. Expect further disconnect in markets.
Collinson FX market Commentary: October 10, 2012
The IMF set warning bells ringing around the globe reviewing global growth forecasts lower to levels not seen since 2009. The warning derive from Europe's inability to solve the debt crises, the fast approaching US Fiscal cliff and China growth slowing.
The EU crises stumbles on with nothing new from the Finance Ministers meeting and protests greeting Merkels Greek visit. The EURO suffered, with the gloomy prospects, down to 1.2865 and the GBP below 1.6000 after some disappointing Industrial and Manufacturing production data. In the US, the NFIB Small Business Optimism reported a further fall to 3 year lows.
Markets now await the kick off of earning season with Alcoa after the bell. Prospects are not good so the markets remains square.
Commodities remained steady despite pessimism, supporting the AUD above 1.0200 although the KIWI dropped to 0.8175 after a fall in Credit Card spending. Watch Eco-Political developments in Europe and Earnings in the US!
Collinson FX market Commentary: October 9, 2012
US Markets were lightly traded with the Columbus Day holiday and little drama occurring in Europe. EU Finance Ministers meet this week and the ESM Bail-out mechanism commences.
The question is when Spain will sink the snout into the trough!? In EU economic data, German Exports and trade continued to improve but Industrial Production contracted 0.5%. Markets will be focused on the commencement of the all important earnings season kicking off with Alcoa tonight. Expectations are not high for earnings which have been a driver for equity and commodity markets.
The EUR slipped back to 1.2970 and the GBP 1.6030. Higher yielding currencies fared better with some positive news from China. The Services PMI rose to 54.3 from 52 and this has helped the AUD which broke above 1.0200 again and the NZD 0.8195.
Look for developments from the debt crises in Europe and earnings in the US to drive market direction while the Presidential Election is now a major distraction.
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