Collinson FX Market Commentary - June 17 - GDP rise pumps KIWI

by Collinson FX on 17 Jun 2016 Collinson FX Market Commentary - June 17 - GDP rise pumps KIWI

June 17 - The Brexit referendum continued to dominate markets overnight, creating uncertainty and volatility, through currencies and equities. Brexit campaigning was halted overnight, when a Labour MP was killed, although whether this was related is uncertain.

The Bank of Japan resisted the temptation to continue to expand QE, pushing the Yen to 104.00, which is seen as a level that may cause intervention!? The GBP slipped, in early trade, after the Bank of England left rates unchanged. Sterling did recover to trade 1.4225. The single currency has also been contaminated by the Brexit issue, as a leave, may trigger a collapse of the entire Union.

NZ GDP was better than expected, rising 0.7%, leading to a rise of 2.8% annually. This added further fuel to the currency, which jumped back to 0.7040, reflecting the positive state of growth in comparison to other western economies. The AUD slipped back to 0.7350, despite steady Employment data, with the pending election consuming the local scene. Temporary suspension of the EU referendum in the UK, will resume and volatility will reflect polls, until the 23rd of June.

Collinson FX Market Commentary - June 16 - Brexit consumes markets
June 16 - The Fed left interest rates unchanged, with excuses ranging from the Brexit to the labour market, allowing the inaction. The Feds rhetoric has been of interest rate rises, but has failed to act, with global and local economic failures the reason. Yellen answered questions and highlighted improving economic activity and a recovering labour markets after the crushing previous Non Farm Payrolls.

There have always been plenty of economic excuses as global markets fail to recover, while Central Bank policies have flooded markets with liquidity, unable to spark growth. Record low rates are succeeding in creating bubbles, lead by equities, while deficit/debt remain a massive threat. The 'Brexit' has been met by nervous markets, leading in to vote, which will dominate for the next week.

The Dollar slipped after the FOMC, pushing the EUR up to 1.1250, while the JPY moves in to intervention territory in the 105's. The AUD consolidated above 0.7400, immersed in their own pending election, while the NZD holds above 0.7000. NZ Home Sales continue to thrive, in the low rate environment, while the KIWI hits exports.

Collinson FX Market Commentary - June 15 - Brexit consumes markets
June 15 - Markets are being consumed by the coming UK referendum. The strong rally by the 'leave' movement is sending shock waves through markets. Equity markets have been undermined, while currency markets have been usurped, with even the FOMC meeting being put in the back seat.

The Fed are likely to use the cover to leave interest rates at record lows, as circumstances prevent any rise, due to economic inertia and debt servicing inability. The flows are heading towards the Dollar and the Yen. The GBP slipped back to 1.4100, while the EUR tests 1.1200, on the downside.

There was nothing on the economic front to distort markets moves, but there is little to deprive attention from the 'Brexit', with the leave campaign gaining momentum. The EU is vulnerable and the UK exit could tip the scales. We have a whole week to go! The AUD has dipped to 0.7350, while the NZD is testing 0.7000 on the downside. Flows are heading to safety.

Collinson FX Market Commentary - June 14 - Brexit leave vote looms

June 14 - Equities drifted lower to open the week, ahead of the Feds rate decision and the Brexit vote on the 23rd of June. The Fed are likely to refuse to raise rates, as previously indicated, using the softening global economic conditions as an excuse.

Japanese Manufacturing contracted 11.1%, while Chinese Industrial Production was steady, along with the Retail Sales. The GBP consolidated at 1.4225, with the leave vote overtaking the remain, sending shivers through European markets. The EUR traded 1.1290, while the JPY approached 106.00, with the Dollar drifting.

There was little upward pressure on the Dollar ahead of the FOMC, allowing the AUD to briefly regain 0.7400, while the NZD firmed above 0.7000. Fed inaction should lead to a falling reserve although Brexit fears may allow some flight to safety!

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