Collinson FX Market Commentary - May 7 - Macron win expected

by Collinson FX on 7 May 2017
Collinson FX Market Commentary - May 7 - Macron win expected

Markets closed the week on a positive note with a much anticipated victory for the status quo in France. Macron is already elected, according to most, but so was HRC and Brexit was a pipedream!

Non Farm Payrolls was better than expected and Unemployment fell to 4.4%. Oil bounced and commodities regained some mojo. The associated currencies were beneficiaries, with the AUD rallying above 0.7400, while the NZD consolidated above 0.6900.

The EUR trades around 1.1000, so nothing less than a victory for Macron will do, a loss being catastrophic. The only way LePen can make a dent is a strong turnout from the minority, enthusiastic supporters, while inertia is a threat. There is little upside, so most will be square, with a few reckless punters short!

Macron wins so now markets will look at how he will govern. Parliamentary elections will follow, but without an established political party, there will be trouble ahead.

Collinson FX Market Commentary - May 5 - Confidence up on Macron win

European equities and the single currency both posted gains, as confidence rises that Macron will ascend to the Presidency of France, allaying fears of a massive upheaval. An upset victory would cause massive disruption in markets as it would lay the ground for the dismemberment of the EU and the EURO.

The EUR surged towards 1.1000, supported by stronger Composite and Services PMI, while Retail Sales also remained positive. US Markets did not follow suit, as the Dollar retreated, despite solid economic data. US Factory Orders and Durable Goods Orders both posted gains while a decrease in job cuts was posted by the Challenger Report. Healthcare reform passed the US House, a major gain for the Trump legislative agenda, which now needs to pass the Senate.

Commodity prices have been under pressure, depressing the associated currencies, which have found no solace in interest rate differentials. The AUD has been the biggest victim, falling below 0.7400, while the NZD dropped below 0.6850. Commodity demand has slipped, hitting energy prices and companies, with soft Chinese demand. Markets will focus on US Employment and the French elections.

A Macron victory will have little impact, save a relief rally, preserving the status quo. If LePen managed a bigger upset than Brexit, markets would be thrown in to turmoil, with equities, commodities and currencies all suffering massive hits!

Collinson FX Market Commentary - May 4 - Upbeat US commentary

The FOMC left rates unchanged and associated commentary was positive. The Fed sees moderate economic growth, inflation and steady labour markets. Expectations are for another rate hike, perhaps in June, giving support to the Dollar.

The EUR slipped below 1.0900, while the Yen has moved to 112.60, reflecting the rising Dollar. The ADP private sector jobs report was better than expected improving prospects for Fridays NFP and Employment data. The pressure on interest rate differentials between the AUD and USD finally took its toll.

The AUD dropped a big figure, to trade 0.7430, which is testing technical levels that may signal significant downside. The NZD was also impacted by the rising reserve, falling to 0.6870, despite strong local jobs data. French elections threaten European markets while Employment data in the US will be a point of speculation until Friday.

Collinson FX Market Commentary - May 3 - KIWI bounces back

European markets were steady, but nervous, ahead of the French run-off elections. A move for LePen would have the most dramatic impact on markets, as Macron represents the status quo, despite not being from the traditional political parties. LePen is the outsider, running to unseat the elite, destroying globalisation.

European manufacturing PMI data was steady, allowing the EUR to trade above 1.0900, while the Yen broke above 112.00.

The RBA left rates, at 1.5%, making it 8 times in a row. Rate cuts are over, despite residential real estate appearing to come off the boil, so any sign of serious inflation may encourage a rate rise. The AUD jumped to 0.7525 on the news, while the NZD consolidated above 0.6900, supported by a positive dairy auction.

Collinson FX Market Commentary - May 2 - KIWI bounces back

European markets were closed for the May Day celebrations and US markets were quiet. US Manufacturing data, in the form of ISM and PMI, was weaker than expected. Trump promises over tax reform and deregulation now have to be instituted, in the form of legislation, which have to be accomplished to cement the market rally. Trump was also about threatening the breakup of big Wall St Banks, which will come with de-regulation, but this will not scare many.

The EUR is trading around 1.0900, while the Yen moves back towards 112.00, reflecting a strong reserve. Speculation over the run-off French elections will cause volatility in markets, while Central Bank action and commentary, will impact this weeks markets. Commodity currencies began the week strongly, with the NZD jumping back above 0.6900, while the AUD trades click here and here Or for the latest update click here

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