Collinson FX Market Commentary - April 22 - A break out week

by Collinson FX on 23 Apr 2016 Collinson FX Market Commentary - April 22 - A break out Click here to find out how to get Collinson FX's free iPhone app

Apr 22 - The ECB left rates unchanged overnight and President Draghi signalled QE would continue for an extended period. The effectiveness of the bloated monetary largesse is under serious question from many economists. The Fed has employed the massive expansionary monetary policy to combat recession and defict/debt crises and so follows other central banks.

The ECB has been all-in on this policy, but debt and deficit have continued to spiral out of control, while economic recovery and growth have stagnated. Monetary Policy is an important cyclical tool but cannot compensate continued fiscal ineptitude. The ECB actions pushed the EUR below 1.1300, while the GBP traded 1.4330, hit by a further contraction in Retail Sales. Oil prices drifted and weakening commodity prices took the heat out of the recent rally in the associated currencies.

The AUD fell back to 0.7730, while the NZD struggles to hold 0.6900, after a break-out week for the antipodean currencies. Look for economic data releases to diagnose local currency moves with Central Bank commentary and action to drive overall direction.

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Collinson FX Market Commentary - April 21 - Oil on post Nov high
Apr 21 - It was a quiet day for data releases yesterday but a surprise gain in Existing House Sales out of the US strengthened the USD despite a contraction in Housing Starts and Building Permits the previous day.

The EUR traded below 1.1300, while the GBP trades lower at 1.4330, both suffering the strengthening Dollar. Commodity prices rose across the board with the WTI oil rising to the highest level since November last year, trading above $42.50.

Despite this positive news for commodities the NZD and AUD both opened lower this morning with the NZD falling below the 0.7000 big figure and the AUD also failing to hold on to 0.7800. Today sees an array of data releases and announcement, with the Philly Fed Survey and ECB rate decision being the headline events.

Collinson FX Market Commentary - April 20 - Kiwi cracks USD 70c

April 20 - European equity markets rose higher, after the lead from Wall Street and Asian markets, boosted by the stronger important ZEW Economic Sentiment data. Oil prices continued to rebuild after the weekend derailment post-Doha. This has boosted commodities and the associated currencies, which have out-performed majors, versus the reserve.

The AUD raced through 0.7800, while the NZD broke the Big-big figure 0.7000, further boosted by rising prices in the latest dairy auction. The latest surge in currencies are seen as a reflection of the relative economic position of these countries who are performing better than the US and Europe economic zones. The problem is that it is all relative!? The extreme monetary policies in global Central Banks have corrupted markets with extreme liquidity levels.

The EUR traded 1.1370, while the GBP jumped to 1.4400, both supported by an insipid reserve. US Housing starts contracted 8.8%, while Building Permits fell 7.7%, which took the gloss of the surge in equities. Australia now have effectively called a 'double dissolution' election for July 2! This was enabled by the Senate blocking the ABCC for a second time, thus allowing Turnbull to call an early 'DD' election, which involves the dissolution of both houses. It is set to be very close but the incumbents will start slight favorites. Usual rules apply regarding currencies.... positive impact for the ruling right.

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Collinson FX Market Commentary - April 19 - Oil prices recover

April 19 - Oil and Central Bank commentary continued to dominate markets to open the new week. Oil was hammered, on the open, due to the failure of the Doha accord for Oil producing nations.

Oil prices recovered overnight, to trade around $40, thus boosting commodity prices. The New York Fed President, William Dudley, poured cold water on the Dollar and supported further QE. Equities loved this news and the DOW quickly rallied to break above 18,000. Dudley observed that normalisation of Monetary Policy would be 'gradual and cautious' as markets experience 'significant uncertainties and headwinds to growth'!

The Dollar sagged, with the EUR trading 1.1320, while the GBP heads towards 1.4300. Commodity currencies received a boost from a rebound in commodity prices and a flagging reserve. The AUD rebounded strongly, approaching 0.7750, while the NZD sailed through 0.6900. QE and associated currencies wars remain the Central driver of currency markets.

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