Collinson FX Market Commentary - Dec 1 - OPEC defies pundits

by Collinson FX on 1 Dec 2016 Collinson FX Market Commentary - Dec 1 - OPEC defies pundits

OPEC have defied all the sceptics and done a deal! The Cartel have agreed to cut Oil production by 4.5%, allowing Oil prices to surge towards $50/barrel, feeding Energy companies. This is huge news in the energy space but solidarity will have to be seen to be believed!?

US Interest rates continued to rally, pushed by positive demand led forces, rather than a Central Bank corruption. The Fed will fall in to line, driving the Dollar ever upwards, reflected especially in the Yen. The Japanese currency has been the biggest mover, busting through 114.00, while the EUR slipped below 1.0600.

The EU remains in the doldrums, with stagnant economic growth and flooded with ECB interventionist liquidity. This was confirmed with the dead EU CPI and contracting German Retail Sales. US Private Sector Jobs jumped 216,000, well above expectations, as reported by the ADP. Economic confidence and growth led demand have fuelled the rising Dollar and this once again impacted the commodity currencies.

The AUD lost a big figure, to trade below 0.7400, while the NZD slipped to 0.7075. Rising commodity demand protects the associated currencies and improves EUR and JPY crossrates.

Collinson FX Market Commentary - Nov 30 - Oil drops to $45/barrel

Nov 30 - The Trump rally resumed normal, post election, behaviour. Rising confidence in markets, driven by an expansionary fiscal growth strategy, has filled economic markets with positive sentiment. The sentiment is driving related economic data, with House Prices and consumer confidence, on the rise. This will in turn lead to a boost to investment, thus pushing harder economic data north, with improved growth and employment. The Case Shiller Home Price index rose 5.46%, while consumer confidence surged, to break above 107!

US GDP numbers also pushed higher, to 3.2%, while French GDP remained static. EU growth and sentiment is a massive contrast to the ebullient space the US finds itself in. OPEC confidence is low, with a diverse group not expected to agree to any supply restrictions, pushing Oil back to $45/barrel. The Dollar was quiet, with the EUR edging back above 1.0600, while the Yen trades 112.50.

The Fed is expected to raise rates in December, following market direction, which should support the Dollar 'bull-market'.

The USD has settled into a lull, which has boosted resurgent commodity prices, as growth drives demand. The associated currencies have been beneficiaries, with the NZD breaking 0.7100, while the AUD looks towards 0.7500. A strong dollar will balance commodity rallies, dampening enthusiasm for the related currencies, but cross rates (JPY and EUR) should improve.

Collinson FX Market Commentary - Nov 29 - Iran undermines oil price

US markets retreated, after the long Thanksgiving weekend, with both the Dollar and equities giving up ground. Oil prices are being watched closely, with OPEC meeting this week, all keenly awaiting the outcome. Iran has re-entered the market and this has undermined any supply caps previously agreed.

The Dollar has given up ground to the abrasive commodity currencies, driven by demand factors, allowing some recovery. The KIWI has spiked back to 0.7050, while the AUD has pushed to 0.7460, boosted by the perceived US growth led recovery. The EUR continues to flail, trading 1.0580, while the Yen recovered to 112.25.

The Trump rally looks set to continue and a slew of economic data releases may be improved by sentiment rather than actuality

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