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Collinson FX Market Commentary- August 28, 2013 - War talk crash

by Collinson FX on 29 Aug 2013
Richard Gladwell www.photosport.co.nz

Collinson FX market Commentary: August 28, 2013

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Geopolitical events overwhelmed Central Bank activity and daily economic releases. US equities crashed with the impending military action against the Syrian regime. Chemical weapons may prove the trigger for the West to finally act to prevent a genocidal nation destroying its own people.

This has overshadowed the fixation with Central Bank activity and overwhelmed equity markets, who do not like war. Currencies remained steady with the EUR trading 1.3380 and the GBP 1.5540. US Consumer Confidence rose and the Richmond Fed Activity Index also beat expectations providing solid improvement in economic data releases but these were largely ignored due to international military activity.

The Case-Shiller Home Price Index also booked gains of over 12% and economic conditions continue to improve increasing the likelihood of tapering next month.Turmoil internationally does not assist risk sentiment and the AUD has now slipped below 0.9000.

The KIWI's recent weakness is manifesting, trading below 0.7800. Action aplenty in the Middle East has added further variables into the mix and markets hate uncertainty!

Collinson FX market Commentary: August 27, 2013

The Feds tapering program is again under scrutiny with data dependence the determinant and deteriorating economic reports conflicting with the introduction. Durable Goods Orders fell 7.3%, more than expected, and does not bode well for the Feds perception of the economic recovery and thus the reduction of QE Infinity.

The Housing data tonight will be a litmus test and any erosion of confidence may delay further talk of reduction in stimulus. The Dallas Fed Activity reported an improvement but economic data will be crucial during this week.

The EUR remained steady at 1.3375 and the GBP 1.5575. Commodities continue to drift and weakening trade data in NZ has confirmed a growth in Imports without any corresponding rise in Exports. The extension of credit and a booming Housing Market may be driving the consumer but reversing recently improving trade numbers.

The KIWI trades 0.7830 and below 0.8700 in the cross with the AUD. The AUD has held 0.9000 and awaits directional impetus from the US Central Bank.

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