Collinson FX Market Commentary - Oct 28 - Brit GDP up despite Brexit

by Collinson FX on 28 Oct 2016 Collinson FX Market Commentary - Oct 28 - Brit GDP despite Brexit

Oct 28 - Markets remain in limbo, with equities stagnant, while the Dollar behaves like the ocean tide. Markets are looking at the GDP number, released tonight in the US, to jump to 2.5%. Failure of economic data to meet expectations, has provided the excuse needed by the Fed, to leave massive QE in place.

Durable Goods orders slipped into negative territory while Pending Home Sales eked out small gains. The EUR held 1.0900, while the Yen weakened to 105, with the Dollar in a state of flux. The GBP traded 1.2170, which is historically weak due to worries over Brexit, although the latest GDP number showed improvement.

The growth number moved up to 2.3%, reflecting a post-Brexit recovery, unlike the failed European project. The AUD slipped below 0.7600, while the NZD looks to test 0.7100, after deteriorating trade numbers disappointed. The NZ Trade deficit increased, with a surge in imports, while Exports remained static. Look to US GDP growth data to drive speculation on the Feds rate decision next week.

Collinson FX Market Commentary - Oct 27 - Aussie CPI jump surprise
Oct 27 - Markets steady overnight with little on the economic front to put pressure on bonds or equities. US Services PMI rose from 52.3, to 54.8, while New Home Sales jumped 3.1%.

The housing data continues the narrative of the previously released S&P Case Shiller Home Price Index, which also booked gains, but the volatility in this sector has been continuous post-GFC. Bond yields drifted and the Dollar remained quiet, with the EUR trading 1.0900, while the GBP firmed to 1.2230.

The Australian CPI jumped to 0.7%, greater than expected, boosting the AUD over 0.7700. This was not sustained in overnight markets, with the AUD slipping back to 0.7650, while the NZD traded around 0.7150. NZ domestic markets will consider Trade data today and speculate on the important US GDP number to be released at the end of the week.

Collinson FX Market Commentary - Oct 26 - Conflicted Dollar

Oct 26 - Equities came off the boil overnight, in both Europe and the US, while the Dollar rally faded. US Consumer Confidence slipped back to 98.6, from 103.50, reflecting the weakness in the base of the economy...the consumer! The S&P Case Shiller Home Price Index posted some gains, but these are marginal and unstable, as recent housing data has shown.

The EUR pushed back to 1.0900, while the GBP dipped below 1.2200, reflecting a conflicted Dollar. The Fed are likely to leave rates unchanged next week and the focus remains on the December meeting. It is widely speculated that the Fed will raise rates, giving some impetus to bond yields and the Dollar, but rhetoric has failed at every post this year!?

The NZD stabilised around 0.7150, while the AUD managed to consolidate above 0.7600, ahead of the important CPI number release today.

The inflation data is expected to show a rise in inflation and thus growth. This would support the local currency but any failure in the CPI data would impose significant downward pressure on the AUD.

Collinson FX Market Commentary - Oct 25 - Oil does a quiet slide
Oct 25 - Manufacturing PMI was released in both the EU and the US. The EU was a slight improvement, led by Germany, while the US was a reasonable jump in manufacturing PMI. This enable a steady start to the week, with equities climbing, along with the Dollar, with positive information driving speculation of a rate rise.

The Dollar has remained firm, with the EUR slipping to 1.0850, while the GBP has held above 1.2200. Oil has quietly slipped below $50/barrel, as the Iranians refuse to cooperate with recent OPEC agreements to limit production, allowing a massive surge in supply as Iran returns to global markets.

The rising reserve and weaker commodity prices impacted the associated currencies, with the AUD testing 0.7600, while the NZD dropped back to 0.7110. Central Bank activity remains the major driver of currency direction, with economic data release, influencing the discussion.

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