Collinson FX Market Commentary - Nov 10 - US Dollar loses mojo

by Collinson FX on 10 Nov 2017 Collinson FX Market Commentary - Nov 10 - US Dollar loses mojo

Nov 10 - Equity markets were consumed with US tax reform and the release of the Senate tax bill. The headline was the deferral of the Corporate tax until 2019. The political will for tax reform in Congress is questionable, with flagging Republican solidarity, while bipartisanship a thing of the past. This hit markets hard, with US equities crashing and dragging global markets along for the ride. If Congress fails to pass tax reform, as espoused by the Treasury Secretary, equities will face a major correction.

The Dollar lost some mojo, with the GBP rising to 1.3150, while the EUR jumped to 1.1640. The European Commission revised inflation and growth expectations higher within the zone, which assisted the rise in the currency, despite monetary policy remaining slack. The RBNZ left rates unchanged, as expected, but reviewed inflation expectations upwards. This allowed the KIWI to push back above 0.6950, but inflation without growth is a dangerous recipe, harking back to the past. The AUD remained flat, despite a weakening reserve, amidst the ongoing political turmoil surrounding the Liberal/National Government.

Collinson FX Market Commentary - Nov 9 - Trump on Tour
Nov 9 - Trumps Asian tour rolls on, surprising many with his rhetorical restraint, meanwhile pushing for trade reform. The primary trade goal is to address the massive deficits the US has with trading partners, which is free and fair trade. His speech to the Korean Parliament was received well and sent a stern warning to the North Korean dictator. Tax reform is dominating local US markets, with the passage under pressure, after key races for Governor in New Jersey and Virginia going to the Democrats. Chinese trade data was positive with strong growth in both exports and Imports.

This assisted the demand driven commodity currencies, with the AUD pushing back to 0.7670, despite political turmoil. The NZD regained 0.6900, ahead of the all-important RBNZ MPS, which is expected to leave rates unchanged. The RBNZ has been under threat from the new Coalition Government, although any curbs to their mandate have been deferred, allowing the Central Bank to concentrate on Monetary policy. Inflationary pressures are likely to be exasperated by the Governments promise to raise the minimum wage and the lower KIWI$. This is likely to be offset by lower growth and house prices. Geo-Politics remains the major threat to markets in a week of low economic data release.

Collinson FX Market Commentary - Nov 8 - Trump does Asia
Nov 8 - Trumps Asian tour rolls on and placatory language is now reducing the Geo-Political tensions on the Korean peninsula. The tour is one of diplomacy and trade, as Trump looks to address the massive trade deficits, with Asian economic superpowers.

The RBA left rates unchanged, but this was largely ignored, undercover of the Melbourne Cup. Neutral monetary policy looks likely to continue for the foreseeable future. The real problems lie on the political front, where the Turnbull Government is under extreme pressure, from the MP eligibility issue. This could likely take down the Government and the uncertainty is unwelcome in the markets.

The AUD slipped back to 0.7625, while the NZD dipped below 0.6900, ahead of tomorrows rate decision. The RBNZ is going in to a transitionary phase, as the new 'Rainbow Coalition' establish new operating guidelines. It is likely they will leave rates unchanged but the rhetoric will be important. Bullish historical economic data, which would provide inflationary pressures, may be ignored until the Labour led Government's economic policy becomes more clear.

Collinson FX Market Commentary - Nov 7 - GBP recovers, KIWI holds

US markets opened the week on a positive note with M & A activity in the Tech sector. Broadcomm offered to pay $70/share for Qualcomm in the biggest ever tech merger. The number will be in the vicinity of $130 Billion. Trump is in Asia, on an important trade tour, looking to resolve the North Korean crises plaguing Asian allies.

European Services and Composite PMI was flat, further extending QE pressure, allowing the EUR to slip below 1.1600.

The GBP continues to recover, pushing up to 1.3150, while the Yen trades below 114.00.Trump has played golf and shared hamburgers, with Japanese PM Abe, confirming their extremely close relationship.

Commodity prices opened the week firm, with the AUD trading above 0.7650, while the NZD holds above 0.6900. Look for Geo-Political issues to influence markets.

For more on Collinson FX and market information click here and here Or for the latest update click here

Countries: | NZ: 0800 338 838 | AU: 1800 143 415 | NY: 1888 6257 833 | UK: 0800 0285 834 |

Disclaimer: The details expressed in this website and accompanying documents or transmissions are for information purposes only and are not intended as a solicitation for funds or a recommendation to trade. Collinson Forex Ltd accepts no liability whatsoever for any loss or damages suffered through any act or omission taken as a result of reading or interpreting any of the information contained or related to this site