Collinson FX Market Commentary - Aug 9 - RBNZ to get the stick out?

by Collinson FX on 10 Aug 2016

- RNZYS Winter Series, July 16, 2016 Richard Gladwell www.photosport.co.nz

Collinson FX Market Commentary - Aug 9 - RBNZ expected to get the big stick out

Aug 9 - Chinese inflation was steady, with a slight fall, from 1.9% to 1.8%. This confirms recent economic data reflecting the economic slow down and slowing commodity demand. German Trade numbers were on the rise, with a stronger current account and a corresponding improvement in both Imports and Exports, the sole beacon of light in a dark EU story.

The EUR pushed back to 1.1100, while the GBP lost the 1.30 big figure, slipping back to 1.2990. UK GDP was weak and Industrial and Manufacturing production confirmed a slowing post-Brexit economy. Commodity currencies held on to ground, with the KIWI moving back towards 0.7150, while the AUD consolidated around 0.7650. NZ Markets await some expected aggressive action from the RBNZ, while a quiet week will be keenly awaiting the US Retail Sales data.

Collinson FX Market Commentary - Aug 8 - Kiwi market chatter over RBNZ
Aug 8 - A quiet start to the week in equity markets with little data released. Chinese Trade balance improved, but as has been the way recently, for all the wrong reasons. Chinese Exports contracted 4.4% but this was overwhelmed by a 12.5% fall in imports! Global demand is flagging and that is the problem. Fiscal ineptitude and monetary policy largesse has done little to stimulate global growth and thus demand.

The EUR settled around 1.1080, while the GBP looks to test 1.3000, on the downside. US Markets are looking to the important Retail Sales number but will be impacted by daily economic and Geo-Political developments. NZ Markets are discussing the RBNZ rate decision, which is likely to cut rates, in line with other Central Banks. They would need to do this and indicate further rates to closely follow, to have a serious impact on the currency, as discovered by the RBA!

The NZD is supported by interest rate differentials and holds 0.7100, while the AUD trades around 0.7650. Global currency wars ensure only substantial resolve by the RBNZ will have an impact over the daily cycle.

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