Collinson FX Market Commentary - May 15 - Fiscal ineptitude rolls on

by Collinson FX on 15 May 2016 Collinson FX Market Commentary - May 15 - Fiscal ineptitude rolls Click here to find out how to get Collinson FX's free iPhone app

May 15 - Equities in the US again shed ground, despite a rise in Retail Sales and confidence rising according to the University of Michigan report. The negatives relate to confidence and global conditions continue to disappoint. The Dollar found some support, with the EUR falling to 1.1300, while the GBP dropped to 1.4350.

The Yen has been the mover of late, but has languished over the last few days, trading 108.50. Commodities have been reasonably well supported during the week but the return to the reserve hit the associated currencies.

The NZD has fallen back to 0.6740, while the AUD has drifted to 0.7240, with further rate cuts telegraphed by the RBA. Central Bank monetary policy and the associated commentary continue to dominate markets as fiscal ineptitude rolls on unabashed.

Collinson FX Market Commentary - May 13 - Equities get into irons

May 13 - Equities moved into irons territory overnight. Currencies were static with the EUR consolidating below 1.1400, while the GBP hit 1.4450!

The Yen has been the big mover, of late, breaking above 1.0900. Threats from the Bank of Japan to fight the strong Yen are being put to the test and it would not be a surprise for real action to overwhelm the rhetoric! Commodities remain bid, even at low levels, lending support to the associated currencies.

The AUD drifted back to 0.7320, while the NZD held above 0.6800, supported by some stronger manufacturing data. All eyes are focused on Central Bank activity, with the Bank of England holding fire, while options are limited due to the very nature of the equation.

Nearly all off the Central Banks are closing on Zero interest rates, reducing the ability to act, while QE has been maximized globally. Asset bubbles are now a norm and only bad things can eventuate!

Collinson FX Market Commentary - May 12 - Home sales boost NZD
May 12 - US equities gave up all the previous day's gains and some, while Oil continued to rally strongly, contradicting the previous day's rationality. Earnings are supposed to be behind today's sell-off, but markets remain volatile and nervous. UK GDP rose 0.3%, but remains weak, while Industrial/Manufacturing production was static.

The GBP rallied above 1.4425, while the EUR consolidated above 1.1400, but the action remains around the JPY. The Yen rallied back to 108.00, testing the Bank of Japan, after the intervention threats. The rise in commodities lent some renewed enthusiasm to the associated currencies. The AUD broke back above 0.7350, while the NZD jumped back above 0.6800, boosted by strong Home Sales (+18.4%).

The currency moves are directly correlated to Central bank activity, speculation and commentary. The Australian political landscape is consuming much of the news cycle, due to the coming election, so much of the economic events are interpreted through the rose tinted political glasses.

Collinson FX Market Commentary - May 11 - USD rises confounding Oil
May 11 - US Equities surged overnight, after a rise in the Dollar, confounding the rising Oil price. The big news overnight, was the Japanese Finance Minister warning of intervention in the Yen, if it continued to threaten trade with rises as seen recently.

This pushed the JPY to 109,30, reversing the extreme rally in the currency, seen of late. German Trade numbers improved, but this was mainly to a fall in imports, reflecting weaker demand. German Industrial Production was also weaker, giving little impetus to the EUR, which held below 1.1400.

The AUD traded around 0.7350, while the NZD drifted back to 0.6750, reducing the massive recent gains in the cross.

Collinson FX Market Commentary - May 10 - China data fails to inspire
Chinese trade data released over the weekend did little to inspire markets and forced commodity prices lower. Chinese Exports contracted 1.8%, but imports have been hit hard, falling 10.9%! The associated currencies reacted accordingly, enhanced by a rise in the reserve, triggered by further Fed commentary.

Fed member Evans, observed 'no reason there would not be projected rate rises'. This bolstered the Dollar, with the NZD falling to 0.6760, while the AUD slipped to 0.7300.

Australia is immersed in the election campaign and all economic data is being politicised on a daily basis. The GBP held 1.4400, but the EUR drifted below 1.1400, despite a small rise in German Factory Orders. Monetary Policy and commentary/speculation remains the major driver of markets.

Collinson FX Market Commentary - May 8 - Oz election to be close

Equities recovered to close the week, despite some disappointing Non Farm Payrolls numbers, after some big currency moves over the last few days. The AUD was the centre of attention over the course of the week. The RBA caught the market by surprise, by cutting rates, thus cutting the currency.

The AUD fell by two big figures and then the pre-election budget set the course for an early election. The RBA statement on Friday telegraphed further rate cuts in response to the stunted inflation numbers projected. The election will now be called for July 2 and promises to be a close one! The contraction seen by the RBA statement pushed the AUD even lower, to close the week around 0.7350, in line with the Central Banks desires.

The NZD has suffered the trans-tasman weakness, by falling back to 0.6840, while the cross has spiked. The coming week will look at growth and trade while the Bank of England rate decision later in the week will be watched closely, especially the associated commentary. The EUR will begin the trading week trading 1.1400, while the GBP will open above 1.4400.

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