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Collinson FX Market Commentary- April 16, 2014 - AUD slips back

by Collinson FX on 16 Apr 2014
NZ Etchells Nationals 2014, Day 2, Race 3 Richard Gladwell www.photosport.co.nz

Collinson FX market Commentary: April 16, 2014

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US Equities continued the momentum upwards struggling to recover the massive hits taken last week. The RBA minutes did not reveal any pending support for the AUD, in the form of interest rates rises, and the currency slipped back to 0.9350.

Commodities have also drifted lower lending little to the commodity based currencies. The KIWI also slipped back below 0.8650 in a risk averse environment. The CPI is released today and any breakout would lead to pressures on interest rates and the currency. The EUR has traded around 1.3800 with the important ZEW Economic Sentiment reporting Germany continues to improve while the Euro-zone stutters.

In the US, the Empire State Manufacturing index slipped, reflecting recent economic sentiment. Inflationary pressures are on the rise with unhelpful fiscal and monetary policies not helping.

The housing market has been a shining light in the recovery but looks to be coming into a testing period which would be a signal to the overall state of the economy. Geo-Political threats are on the rise in Central Europe with the fight for the Ukraine coming to a head.

Russia has the momentum and backbone with the West expecting them to behave in the modern PC way. Fat chance!


Collinson FX market Commentary: April 15, 2014

Equity markets finally rebounded after the hammering to close out last week.

The week ended in hedge funds dumping risk, in the form of overvalued tech stocks, reflected in the pummelling the NASDAQ has taken recently. The Dollar also found some support with the EUR trading 1.3820 and the GBP 1.6725. The Dollar remains under extreme short term pressure with little support from the Fed. Contraction of the Fed's Balance Sheet to a more acceptable (Pre-GFC) level will bring concerted and long term support.

The question is when Yellen will reverse the extreme QE policies adopted by her predecessor and as a dove, one suspects, could be a long time coming!

Retail Sales in the US jumped 1.1%, beating expectations, and bringing some confidence to markets. Consumption is a major driver and recovery would signal a rebound in demand and support recent strength in the recovery.

The AUD is attempting to regain 0.9400 while the KIWI trades 0.8670. The RBA Minutes will be released, early today, which will give an insight into the perceptions of the Australian economy and likely strategies. Is this a 'dead cat bounce'?

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