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Collinson FX Market Commentary- August 14, 2013 - US up others slide

by Collinson FX on 15 Aug 2013
49er - Day 4, Oceanbridge Sail Auckland 2013 © Richard Gladwell www.richardgladwell.com

Collinson FX market Commentary: August 14, 2013

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Asian and European equity markets rebounded strongly after some good economic news with the important ZEW Economic Sentiment report surging in Germany and across the EU. Equities fed off the good news but this did not translate so aggressively to US markets.

Equities were positive with the NFIB Small Business Optimism report up but Retail Sales missing expectations. Retail Sales grew 0.2% but markets were expecting better. This dampened the need for tapering so the market rallied. 10 year US Bonds jumped 10 points to trade 2.73% which is a warning sign!

The US Dollar strengthened with QE tapering prospects pushing the EUR down to 1.3250 and the GBP 1.5440. Commodities booked gains but not enough to arrest the rise in the Dollar. The AUD slipped back to 0.9090 and the KIWI below the big, big figure, to trade 0.7950.

Markets will continue to trade the 'tapering trade' and the impact of economic data on Central bank future action. Housing data in the US will now assume centre stage

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Collinson FX market Commentary: August 13, 2013

Equities markets remained weak, with little economic data released from local markets who are looking towards Retail Sales tomorrow and Housing later in the week. The Dollar is creeping back up, as tapering becomes a more accepted reality.

The EUR drifted back to 1.3300 and the GBP back to 1.5475. Asian markets were not overly confident after Japanese GDP missed expectations rising 2.6%, well below the 3.6% expected. Japanese Monetary stimulus has been huge and the rebuild has boosted local markets but this decline in the rate of growth is a bit of a shock and will rattle the bulls. Asian markets have been the driver of commodity demand and these declines do nothing to support resurgent associated currencies.

The AUD slipped back to 0.9150 and the KIWI held 0.8000, with some strong housing data. House Sales rose 14.7% but prices declined 0.5% in a runaway market. US markets will be looking closely at consumer demand and the impact economic news will have on Central Bank policy.

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