Collinson FX Market Commentary - Nov 22 - KIWI and AUD bounce back

by Collinson FX on 21 Nov 2016

Start of PIC Coastal Classic - October 21, 2016 - Kotuku Richard Gladwell www.photosport.co.nz

Collinson FX Market Commentary - Nov 22 - KIWI and AUD bounce back

Nov 22 - Risk appetite surged when markets opened in the US for a shortened holiday week. Thanksgiving in the States means the short week will encourage many to square positions. The Dollar reversed the massive recent gains, allowing some profit taking, while commodities rebounded strongly.

Commodities will be a major beneficiary of a demand lead recovery, sparked by enormous fiscal stimulus, while taxes are cut in the US. The pressure has been negated by the surge in the Dollar, while interest rates have surged, supporting the rising Dollar. Growth and demand have been scarce resources post-GFC, having been the missing link, contradicting traditional expansionist monetary theory.

This has allowed the commodity currencies to recover the recent onslaught, with the NZD bouncing back to 0.7050, while the AUD hit 0.7350. Building commodity demand, would normally support these trans-Tasman currencies, although the extent of gains may be severely tested by a bull market Dollar.

The GBP also received a welcome boost, jumping back to 1.1250, while the Yen hit 111.15. Equities charged north, to record levels, with the surge in renewed confidence. Markets are eating up the prospect of the new Trump regime!

(S-W: US President-elect Trump has just announced that he will pull USA out of the TPP agreement on his first day of office along with other measures.)

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