Collinson FX Market Commentary - July 16 - Greeks riot Kiwi collapses
by Collinson FX on 16 Jul 2015
Warmer climes - Fiji July 2015 Richard Gladwell
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Collinson FX Market Commentary - July 16 - Greeks riot Kiwi Click here to find out how to get CollinsonFX's free iPhone app
July 16 - Riots spread across Greece because the people have been mislead and do not accept reality. The far-left have sold the Greek people a lie, telling them they do not need to accept austerity, just vote 'no'! Unfortunately reality hit home. The socialists actually ran out of 'other peoples money'! The vote of 'no' was not an option fo the people. European markets were static but further upheaval is likely. The EUR traded 1.0950, while the GBP held 1.5640, after the Bank of England indicated interest rate rises to come.
The real victims are the commodity markets, smashed by the lack of demand, despite Chinese GDP improving. Chinese Industrial Production expands but statistics never seem to reflect reality.
Real concern are reflected in the commodity currencies, with the AUD falling to 0.7360, while the KIWI collapsed below 0.6600!. Dairy prices are under the pump and the RBNZ is embarking on a belated 'interest rate reduction policy'. The NZ Central Bank has been completely wrong throughout the economic cycle, so why would anyone assume a divergence, they are out in the literal cold. Commodity currencies are the recipients of global realities, with more to come, but the domestic economies remain more sound than US and European equivalents..
Collinson FX Market Commentary - July 15 - A settled world at last
July 15 - Equity markets continued the recovery, sparked by the agreement over Greece, status quo returned. The US completed a much awaited Iran Nuclear agreement and the world is settled by compromising politicians. The perception, at least, is that global leaders are performing their assigned tasks.
This allowed a return to normalcy in the markets including equities and currencies. The EUR held 1.1000, after ZEW Sentiment reported an improvement and inflation data was flat, sending mixed messages.
The GBP crept back to 1.5600, with CPI holding zero, confirming the struggle for economic growth. US Retail Sales contracted, in line with recent GDP numbers, giving little inspiration to the Dollar.
Commodities held ground, despite recent weakness, boosting the AUD back towards 0.7430. The KIWI is consolidating around 0.6700, but further rate cuts, may threaten the interest rate differential advantage.
Collinson FX Market Commentary - July 14 - Greeks humbled
July 14 - Yellen spoke and markets listened! The Fed President confirmed the intent of an interest rate rise and highly convincingly!
The Dollar collapsed, as highly cynical markets, completely discounted her diatribe. Perhaps the 'escape clause' in her verbosity gave many a reason to brush aside intention.
Global equities rallied strongly after yet another Greek agreement has been reached! A further bailout has been agreed to under strict conditions. The Greek humiliation is complete as the realisation of certain damnation was at hand. The socialist Government has completely capitulated and must legislate the reforms quickly. The Europeans have agreed to a further bailout of an already hopeless case.
They are lending money on top of money that will not be repaid. Equity markets appreciated the solution as it gives some, at least temporarily, certainty. The EUR is now back to testing 1.1000, with bleak prospects, while the GBP dropped to 1.5490. Commodity demand was lower with weaker import numbers from China and a compromised European market.
The AUD is again testing 0.7400, on the downside, while the NZD slipped below 0.6700. Global equities may have steadied but commodities remain under extreme pressure through flagging demand therefore undermining the associated currencies.
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