Collinson FX Market Commentary - Aug 5 - NZ Dairy hits 10 year low

by Collinson FX on 5 Aug 2015 Collinson FX Market Commentary - Aug 5 - NZ Dairy hits 10 year Click here to find out how to get CollinsonFX's free iPhone app

Aug 5 - Equities slipped lower overnight after corporate earnings in the U.S. continue to disappoint while markets await all important jobs reports culminating in Non Farm Payrolls. Employment data plays a crucial role in the Feds decision making process and may be the determining factor to an interest rate rise later in the year. The Dollar is reflecting the expectation that Yellen will move, with the EUR slipping to 1.0890, while the GBP dropped to 1.5550. U.S. ISM Manufacturing and Factory orders both posted gains in the U.S. Which adds to the growing confidence.

The RBA left rates unchanged but removed the threat of impending further cuts which gave the currency an immediate boost. The AUD rallied towards 0.7400, but faded in overnight trade to open below. Governor Stevens observed the direct impact commodity prices are having on the AUD, which has driven the currency to lows, but is completely reflected in the NZD.

Dairy prices hit new lows, breaking a 10 year low, driving the NZD to 0.6520. Commodity currencies are suffering lack of global demand enhanced by Central Bank activity enabling the currency to counter the falling prices. Look for NZ Employment to influence local markets.

Collinson FX Market Commentary - Aug 4 - All rise in the US of A?
Aug 4 - Commodities continued to shed weight, with Oil leading the charge, falling to $46! Global demand is on the wane, while the Dollar adds pressure, with telegraqphed interest rate rises. This week is a bazaar of economic data releases and should drive equities, currencies and bonds.

The big movers should be employment data in the US, lead by the ADP and Challenger Jobs report, culminating with the Non-Farm Payrolls. This will have a huge influence on market direction but may provide a much needed excuse for Yellen!? The Dollar edged forward with growing confidence, the EUR slipping to 1.0950, while the GBP dipped below 1.5600.

The AUD remained compromised, by weak global commodity demand, despite stronger domestic Labour, Manufacturing and Housing data. The AUD consolidated around 0.7270, while the KIWI dropped under 0.6580.

Everything points to a rise in interest rates, in the USA, pushing commodities and currencies lower. Yellen will look for a reason to defer, to enable the economy to continue to benefit low cost of capital, ignoring the real cost of excessive monetary inertia.


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