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Collinson FX Market Commentary- August 17, 2012 - No surprises

by Collinson FX on 17 Aug 2012
Canada sailing in the 49ers on Day 9 of the 2012 Olympic Regatta in Weymouth © Richard Gladwell

Collinson FX market Commentary: August 17, 2012

Angela Merkel travelled to Canada to discuss the EU debt crises with the PM,Stephen Harper, and reiterated her support for Draghi's Bond buying plan. This was enough to boost markets after moving sideways all week. Equities and Commodities both booked gains despite weak economic data.

In the US, manufacturing continued to slide with a further contraction of the Philly Fed Survey. Weekly Jobless Claims rose although mixed housing data gave some reason for hope. Building Permits rose 6.8% but the flow on was stunted with Housing Starts falling 1.1%.

The economic data dragged on the USD pushing the EUR to 1.2365 and commodity currencies north. The AUD broke above 1.0500 again with further supply issues boosting commodity prices. The KIWI also regained some lost ground with the severe US drought impacting soft commodities.

The NZD moved up to trade just under 0.8100. No real surprises are expected for the final trading day of the week so watch for further comments from political leaders to give direction.

Collinson FX market Commentary: August 16, 27, 2012

Bad news has become good news as world markets stand on their head. Economic data has been nothing less than terrible revealing a story of recession in Europe and no solution to the debt/deficit crises. Growth has now confirmed the recession in Europe but the inability to confront the issues has resulted in a steady decline.

Economic data continues to deteriorate but the sheer lunacy of market expectations, in terms of Central Bank intervention, remains. The worse the crises deepens the higher the expectation of further monetary stimulus boosting markets!? The crazy situation is exemplified with hope revolving around liquidity and not fiscal consolidation. Stop spending more than you earn. Keynes was wrong!

In the US, markets remained steady in the calm before the storm. Industrial Production rose 0.6% and Manufacturing by 0.5% reflecting the relative improvement in the terms of trade. The New York Manufacturing Index fell, contradicting production data and sending mixed messages. The EUR traded below 1.2300 and sideway moves reflects the sentiment of market participants.

Commodities also showed little, with the AUD moving back above 1.0500 despite a fall in Consumer Confidence. The KIWI rallied back to 0.8070 in a tight trading range awaiting substantive eco-political news.
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