Collinson FX Market Commentary - Sep 19 - Surprise - No US rate rise

by Collinson FX on 18 Sep 2015 Collinson FX Market Commentary - Sep 19 - No US rates Click here to find out how to get Collinson FX's free iPhone app

Sep 19 - No rate rise! The Fed left interest rates unchanged, due to concerns over international stability and growth, noting softer inflation and growth in the US economy. Prospects of a rate rise this year dimmed despite all indications of a desire to return to normal monetary policy.

Markets reacted predictably, stocks and bonds rallied strongly while the USD was sold. The EUR jumped towards 1.1400, while the GBP trades 1.5580, supported by strong local retail data. Commodities received a boost from a declining reserve and this was reflected in the currencies.

The AUD broke back above 0.7200, while the NZD tests 0.6400, reflecting the Feds moves rather than domestic strength. Global uncertainty and growth concerns dominate the Feds talking points but the reality of debt service costs are overlooked.

Collinson FX Market Commentary - Sep 18 - US rates anticipated to rise
Sep 18 - World markets await the FOMC meeting result tonight with more expectations than in years. The Fed have indicated that they will begin to raise rates for the first time since the G.F.C. Market analyst are predicting a hold and deferment to October or December. This would burst a few balloons, but must be considered, due to the cost of raising rates. The Feds balance sheet has expanded to over $4.5 Trillion, from below $1 Trillion before the G.F.C.!

Bank regulation has required banks to hold much greater reserves and this will put pressure on bond demand and quickly raise the price of debt servicing. Rates could spiral quickly and put debt pressure on private and public debt. The Dollar has continued to contract, reinforcing market expectations, with the EUR trading 1.1280 and the GBP 1.5490.

The big story was a spike in Oil, which jumped to $47/barrel, after rumors flooded the markets of US troops on the ground in Syria. Commodity currencies have been huge beneficiaries of the weaker reserve, with the AUD rebounding to 0.7180, while the NZD trades towards 0.6350. Inflation data from the EU and the US were benign so all eyes remain on the Fed!

Collinson FX Market Commentary - Sep 15 - Musical Chairs in Canberra
Sep 15 - Australia changed leaders again overnight, in yet another bloodless political coup, this time exercised by the right of politics. Modern Australian politics resembles post war Italy with the frequency of leadership change!

The Liberals dumped the conservative Abbott in favour of moderate, populist, Turnball to enhance their political fortunes. It will probably work!

The AUD traded higher up to 0.7130, while the KIWI consolidates above 0.6300. Global markets drifted after weaker Chinese data confirmed a slowdown. Europeans are consumed with the refugee crises engulfing the whole community and are reacting by closing their cherished open borders.

US markets drifted lower and all eyes are focused on the Fed meeting Wednesday and Thursday. The Dollar shows no signs of an interest rate rise, with the EUR trading 1.1315, while the GBP jumps to 1.5430. Geo-politics dominate the weeks open but are surely to be overwhelmed by the Central Banks.


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