Collinson FX Market Commentary - July 31 - AUD hit by new build slump
by Collinson FX on 31 Jul 2015
Mr Google - Warmer climes - Fiji - July 2015 Richard Gladwell
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Collinson FX Market Commentary - July 31 - AUD hit by new build Click here to find out how to get CollinsonFX's free iPhone app
July 31 - US GDP was revised back to positive from the previously shocking contraction. This adds fuel to the fire burning for the Federal Reserve to raise interest rates. The two dictated determinants for a rate rise in the US are Employment and Inflation and both are compliant. It would be hard to argue against a return to normal monetary policy unless there is an economic or GeoPolitical crises.
Equity markets were flat reflecting the lack of economic data releases and mixed corporate earnings. The Dollar remains bid, due to Central Bank prospects, with the EUR slipping to 1.0920 and the GBP holding 1.5600. Oil and Gold lead commodities lower which continues to impact commodity currencies.
The KIWI is testing 0.6600 on the downside, while the AUD slipped below 0.7300, after suffering an 8.6% contraction in Building Applications. Economic data will determine daily equity and currency moves to close the week save an abrupt Chinese stock market collapse.
July 30 - The FOMC confirmed that an interest rate rise was in the pipeline for later this year. The Fed observed the Labour market had improved to such an extent that a rate rise is probable. The Chinese stock market crash and the Greek crises had both threatened the global economy which could negatively impact the US.
The Chinese crisis is far from over, but perhaps this will not contaminate the greater economy, thus global markets. The US appears to be moving to raise rates but the Dollar did not reflect this as they left rates unchanged. The Fed have been reluctant to commit and have allowed excuses to permeate their language.
The EUR hovered around 1.1000, while the GBP traded around 1.5600. Commodity demand remains weak but the associated currencies continued to rebuild, with the AUD breaking back to 0.7300, while the NZD pushed above 0.6650. Central Banks, more particularly the Fed, control currencies and bonds which react to economic data and global economic crises. There appears to be a plethora of reasons to defer any interest rate rise!?
July 29 - Stock markets rebounded after a week of sales ruminating from Chinese panic. The said market consolidated during yesterday's trade and gave some confidence to global equities. It is far from over and there will be more complications. The Dollar rebounded against the EURO, trading 1.1050, while the GBP hit 1.5600 supported by the prospect of interest rate rises.
Commodity currencies were relieved by the reported recovery in China, with the AUD breaking back above 0.7300, while the NZD pushed above 0.6650. The markets have been grossly short commodity currencies, for a very good reason, but now are paying the price! Domestic economic data will be a major driver of markets while keen eyes train on China!
July 28 - Chinese equities fell off another cliff to begin the week sending jitters through global share markets. After another testing week across global markets the Chinese collapse has sparked fear on markets. Chinese Government intervention has made some difference, but a fall of 8.5% on the day, worries many!
Chinese contraction is impacting corporate sales, to those exposed to Chinese markets, impacting European and US earnings. The Dollar was hit overnight, with the EUR jumping to 1.1100, while the GBP moved to 1.5550. Commodity demand remains under pressure and so the associated currencies did not receive the boost from the flagging Dollar.
The AUD was tenuous, trading 0.7270, while the NZD looks to secure 0.6600. The focus appears to be on how far China will fall and how much impact the share market collapse will impact the greater economy....time will tell!?
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