Collinson FX Market Commentary - Nov 23 - Surfing the Trump Hump
by Collinson FX on 23 Nov 2016
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Collinson FX Market Commentary - Nov 23 - Surfing the Trump Hump
Nov 23 - Equity markets continued to pile on the runs, exploring record new territory, riding the 'Trump bump'! Economic data release was slow in the US, in a shortened holiday week, allowing post-election trends to continue. The Dollar consolidated after some profit taking, with the Yen trading around 111.00, while the GBP remains above 1.2400.
The EUR remains challenged, trading 1.0600, after ECB President Draghi confirmed expansive current monetary policy. Commodities are bid, supporting the associated currencies, although tempered by the rising Dollar. The AUD attempts to regain 0.7400, while the NZD consolidates above 0.7000, relying on continued demand led support.
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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