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Collinson FX Market Commentary- April 26, 2013 - Poms avoid a bath

by Collinson FX on 27 Apr 2013
Foiled - 2013 Auckland Cup, Day 3 Richard Gladwell www.photosport.co.nz

Collinson FX market Commentary: April 26, 2013

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Equity markets were positive again after some good news in the UK boosted confidence. The GBP shot up, trading well above 1.5400, after GDP grew 0.3% thus avoiding the dreaded triple dip recession.

European markets welcomed the signs of recovery despite Spain hitting new record highs in Unemployment. In the US, markets were strong earlier after Weekly Jobless Claims fell but the rally unwound after some negative comments from Bernanke. Bernanke commented on the vulnerabilities still existing in the markets. The concentration of risk in the few remaining big banks have meant regulation is necessary and the system remains open to runs.

The comments saw the DOW plunge after a day long rally and means we are not out of the woods yet. The commodity currencies settled after unsettling comments, with the AUD slipping below 1.0300 and the KIWI holding 0.8500 after a squeeze up during ANZAC day.

NZ markets will look closely at the trade data released today and may impact the NZD during the domestic trading day. Bernanke's warnings mean market participants must remain vigilant and for serious systemic risks to the downside exist as May approaches!


Collinson FX market Commentary: April 24, 2013
Markets recovered as the bulls assumed control again with Bernanke providing all the necessary support.

Markets were frightened earlier when AP Tweets were hacked sending out a false report of explosions at the Whitehouse. Markets tumbled into negative territory but quickly recovered when the scam was uncovered.

Earlier Asian markets were lower with weaker HSBC flash PMI for China, revealed lower Manufacturing than expected. European markets shook this off with stronger PMI data from France. Equities thrive on the excesses of Central Bank largesse while currency values are eroded.

The EUR dropped below 1.3000 and the GBP to 1.5240. New Home Sales in the US recovered, rising 1.5%, and giving some economic support to the equity rally. The DOW looks set to have a go at the 15,000 mark before the May correction hits markets.

The AUD has suffered the risk aversion trade but is trying to consolidate around 1.0250 with the Leading Index rising by 0.3%. The KIWI is testing 0.8400 on the downside and both commodity currencies are vulnerable to rising equity risks.


Collinson FX market Commentary: April 23, 2013

Equity markets were flat again to open the new week with the bulls attempting to get the car back on the road. Liquidity still flows thick and fast from the Fed, BoJ and ECB fueling the bubble in equities, although signs of the commodity bubble deflation is upon us and is sending nervous jitters through equities investors.

The endless cash printed by Central Banks has funded a massive move to equities and made the Investor class rich. Main Street has not had the spare cash to invest as living costs have been spiraling despite the lack of ‘measured inflation’. The EU has been imposing austerity as the single currency prevents market mechanisms righting the ship but this has been largely unsuccessful as growth has contracted and debt has continued to overwhelm many. Debt/GDP has now climbed to 90.6% from 87.3% for the whole Eurozone.

This should strike a warning bell if not flat out panic. The Central Bank corruption of currencies has funded the debt binge and now they cannot return to real interest rates as the service of debt would be impossible! In the US, the Chicago Fed National Activity Index contracted further than expected and Existing Home Sales fell 0.6%, reaffirming the weakness in economic data. The fear will spread as May approaches and reality hits home.

Commodity currencies continue to soften with the AUD 1.0265 and the KIWI 0.8400 as risk appetite continues to decline. It would pay to be very vigilant and square to short over the next week or so.

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