Collinson FX Market Commentary - Nov 26/27 - Markets back in sync

by Collinson FX on 28 Nov 2016 Collinson FX Market Commentary - Nov 26/27 - Markets back in sync

Nov 26/27 - Black Friday is the biggest US shopping day, coming the day after Thanksgiving, allowing only a half day's trade on Wall Street. Markets are flat over this long weekend due to the thin trade but they did close in the affirmative. The focus will be on the extent of the Retail day-sale boom, which look to be positive, in line with the confidence emanating from the US. Markets are now back in sync, with good economic news, driving positive reactions in demand for equities and commodities.

Post-GFC markets have been upside down, with negative economic data driving equities up, due to Central Bank interventionist monetary policy.

Trumpism should result in demand driving growth and interest rates. This should flow through in to currencies, thus relieving analysts of the cryptic diagnosis necessary, in lalaland!

The Dollar remains bid, with the EUR settling around 1.0600, while the Yen holds above 113.00. Commodities are also beneficiaries of rising market confidence, thus demand, constricted by the rising reserve.

The AUD closed the week at 0.7430, while the NZD broke strongly above 0.7000, driven by Dollar behaviour. The coming week is flush with economic data releases, lead by US employment and growth statistics, driving the market narrative.

Collinson FX Market Commentary - Nov 25 - KIWI drops below 70c

Nov 25 - Thanksgiving long weekend in the USA translates in to a very quiet close to an extra short trading week. European markets remain open but very thin on trade. Equities felt the Trump-effect, as equities finally managed to book some gains, supported by steady German GDP growth.

This did not interrupt the rising Dollar, with the EUR falling back to 1.0550, while the Yen has been the real story. The USD/JPY has been the real indicator, jumping to 113.50, a dominant currency trade. The surge in US confidence, has lead to improved global demand, driving up commodity prices.

The associated currencies have not responded accordingly, due to reserve strength, which should flow through to improved trade with rising returns from both commodity prices and softer currencies. The AUD has attempted to hold 0.7400, while the NZD has slipped below 0.7000, with local trade data released in local markets an influence. Japanese CPI data, will reflect growth, impacting Asian trade today.

Collinson FX Market Commentary - Nov 24 - US surges as EUR stagnates

US Markets continued to benefit the Trump surge, with equities hitting record levels, while the Dollar continued the bull run. The massive spike in confidence has fed risk appetite and prompted markets to flourish going in to the long Thanksgiving weekend.

The contrast with Europe is startling, with stunted equities and a mortally wounded currency. Europe remains stagnant, with flat growth and flooded with expansionary monetary policy, while the post-Brexit instability flourishes. The EUR has collapsed to 1.0550, while the GBP has fared better, trading 1.2450. The Yen has also been a major victim, now flailing, hitting 112.50. University of Michigan confidence blossomed, while Durable Goods Orders jumped, following the economic narrative.

Commodity prices have reacted well to the promise of a growth-led economic boom in the US, although the surging Dollar has taken its toll on the associated currencies. The NZD is now testing the big, big figure of 0.7000, on the downside, while the AUD slipped below 0.7400. Markets are now behaving in a more economically logical manner, rising with growth prospects, rather than reacting to external monetary interventionism.

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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