Collinson FX Market Commentary - April 17 - AUD drops big time

by Collinson FX on 18 Apr 2016 Collinson FX Market Commentary - April 17 - AUD drops big Click here to find out how to get Collinson FX's free iPhone app

Equity markets finished the week softer after a strong rally to new highs. Chinese data has reassured markets with GDP growth coming in at 6.7%, while Industrial Production and Retail Sales both beat expectations. The 'worlds factory' gave the global markets a boost, but their statistics are questionable, as are many in the US and Europe!?

Empire State Manufacturing jumped but was tempered by retarded Manufacturing and Industrial Production. Oil prices gave up much of the weeks gains and this directly impacted Energy Companies. The Dollar was also touched, with the EUR trading 1.1280, while the Yen rebounded to 108.70. Commodity currencies continued to out-perform, with the AUD consolidating above 0.7700, while the NZD broke back above 0.6900.

These currencies now become a target for local Central Banks to combat gains to bolster exports. The real mover will be the Feds actions. The Fed has promised regular interest rate rises this year, but failure to act, has enhanced these commodity currencies. The DOHA meeting failed, over the weekend, without any limits on Oil supply. This has hit commodity currencies, on the open, hard. The AUD lost a big figure, to trade 0.7600, while the NZD slipped back to 0.6870!

Collinson FX Market Commentary - April 15 - Steam runs out of Rally

Apr 15 - Markets flattened overnight as the steam ran out of the rally. Financials and Energy companies have lead the rally, in equities, as earnings for financials improve and commodity prices recover. Oil sits around $41.50/barrel which has been representative of a recovery in previously decimated commodity prices.

The Dollar has begun to recover , which has imparted some downward pressure on the commodity recovery, but the reserve rally is dependent on economic growth!? The Yen surge has also been interrupted with the resurgent Dollar, trading 109.20, while the EUR traded 1.1250. The Bank of England left rates at record lows and comment the EU referendum may impact UK growth, through uncertainty, while export market may be tempering export prospects.

The GBP has been the victim, down to 1.4120, but has weathered the storm so far. Commodity price recovery has assisted the associated currencies, although the recent rebound in the reserve has capped the resurgence, reflected in the NZD trading 0.6830. The AUD is again testing 0.7700, despite a retracement coming from Moody's warnings of a possible downgrade, further embellished by improving local Unemployment (5.7%) data.

Collinson FX Market Commentary - April 14 - China has major upturn
Apr 14 - Financials continued to lead equities higher with improved earnings and support for energy companies. Chinese exports experienced a massive turnaround, from a massive contraction of 20.6%, to a huge expansion of 18.7%!

This was a massive shot of adrenaline to markets, with expectations that China may have turned the corner, boosting global confidence and demand. The demand has translated directly into commodity prices and the associated currencies. The AUD briefly tested 0.7700, although settled back to 0.7650, while the NZD held 0.6900 despite a resurgent Dollar.

Retail Sales in the US contracted 0.3%, disappointing markets, but the news from China more than compensated. The Beige Book confirmed growth in the US economy and observed low Unemployment is pushing wage growth. This boosted the Dollar with the prospects of a Fed rate rise. This hit the EUR, which fell to 1.1280, while the JPY moved up to 109.20. Markets remain buoyant after a frustrating previous week. Monetary policy stimulus continues to drive technical highs.

Collinson FX Market Commentary - April 13 - Oil leads the charge

Apr 13 - Equity markets rallied again overnight, led by Financials and Energy companies, as Oil broke above $42/barrel. The rally in energy prices, has lead a broad rally from commodities, fueled by increasing demand from stabilizing economies. The IMF reviewed Global growth back to 3.2%, while the Fed has been encouraged by 2% US GDP growth, although qualifying rate rises with continued economic conditions.

This boosted the Dollar against the resurgent Yen, which bounced to 108.70, while the EUR fell to 1.1380 and the GBP slipped to 1.4270. US Markets keenly await Retail Sales and CPI data, which will drive markets, although recent equity rallies have been snuffed out on the close. This is not a positive sign to close on lows!?

Commodity currencies have posted gains, despite a rally in the 'Big Dollar', pushing new highs. The NZD jumped towards 0.6900, while the AUD is heading towards 0.7700, supported by growing business confidence. Central Bank speculation remains the major driver to monetary challenged markets although retail numbers and inflation will be huge signals to the state of the US consumer and local growth.

Collinson FX Market Commentary - April 12 - Oil price goes above $40
Apr 12 - Chinese inflation came in at 2.3%, in line with recent data, confirming growth in the economy. This sent a message to markets and equities jumped 1.6%. Oil prices also took heart, jumping to above $40/barrel, leading the way for a recovery in commodity prices.

European equity markets followed with news of an Italian Bank debt buy-back scheme. This all led to further gains in the US after a week of questionable confidence previously. The big story on the currency front remains the Yen, which broke below 108.00, sending disturbing signals to markets. The Yen has always be a safety currency but the recent gains have been the subject of much speculation.

The massive rally in the Yen has seen speculation of a deep corruption of monetary policy, thus markets, resulting in repatriation due to fear! Commodity currencies continued to benefit the recent recovery in prices and demand, with the AUD moving back towards 0.7600, while the NZD pushed above 0.6850. Look for economic data releases and Central Bank speculation to drive market direction.

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