Please select your home edition
Edition
Collinson and Co

Collinson FX Market Commentary- August 29, 2012 - Markets dither

by Collinson FX on 29 Aug 2012
Image of the Day The Wave Muscat, skippered by Leigh McMillan (GBR), with tactician Ed Smyth (NZL), mainsail trimmer Pete Greenlagh (GBR), headsail trimmer Bleddyn Mon (GBR) and bowman Hashim Al Rashdi (OMA)- Extreme Sailing Series 2012 © Roy Riley / Lloyd Images http://lloydimagesgallery.photoshelter.com/

Collinson FX market Commentary: August 29, 2012

http://itunes.apple.com/app/collinsonfx/id533360650?mt=8!Click_here to find out how to get CollinsonFX's free iPhone app

Markets continued to dither ahead of Ben Bernanke's address to Jackson Hole at the end of the week. There was plenty to pre-occupy markets with the Hurricane Isaac fast approaching New Orleans to celebrate the 7th anniversary of Hurricane Katrina and the Republican National Conference.

As markets await the Wyoming Central Bank conference the ECB President, Draghi, has declined to attend citing a heavy work load ahead of the EU meeting next week. Draghi is drowned in problems with the need for a new Bond Buying program to bolster of his claims of saving the single currency.

The EUR gained ground with many believing a solution is nigh! The EUR rallied to1.2565 despite tepid economic data. In the US, the S&P Case-Shiller Home Price Index, rose 0.5% but this was countered by a fall in Consumer Confidence. The Richmond Fed Manufacturing Index continued to show weakness in this sector. Markets will continue to dawdle until Friday where many expect QE3 but Bernanke will be reluctant to act before the Presidential Elections.

The AUD continued to deteriorate back to 1.0375 after New Home Sales fell 5.6%.

The KIWI has also drifted back to 0.8050 and may test the big, big figure if commodity pressures continue to push lower and the AUD remains vulnerable.


Collinson FX market Commentary: August 28, 2012


Markets moved sideways with no major economic data releases to provide direction. The key factor in markets is the extremely low volume even considering summer trading. The confidence in equities is at historical lows as the consumer remains on the sidelines. The low volumes have still not effected the moves up as the NASDAQ trades at 12 year highs but these have been fueled by fiscal policy and the flood of cash awash in the markets.

When the liquidity is withdrawn from the economy, that will be the test and the current volumes should serve as a warning. In Europe, markets await further news on the debt/deficit crises and developments surrounding Greece. A temporary secession from the single currency is the latest rumour and jells with the chronological map of a year end departure.

It is never likely to return but more likely to serve as a precedence for other failed states. The EUR traded around 1.2500 waiting for some moves in market sentiment. In the US markets await Jackson Hole and the appearance of Ben Bernanke. It is at this venue he announced QE two years ago!

The Dallas Fed's Manufacturing Activity report dropped 1.6 cementing weakness in the manufacturing sector. Politically, the Republicans meet for the Convention in Florida as Hurricane Isaac unsettles the Gulf region. Commodities drifted lower as global demand slumps and risk appetite stalls. The AUD fell below 1.0400 and looks vulnerable to global weakness.

The KIWI also drifted below 0.8100 with little local economic news to provide direction.



Collinson FX market Commentary: August 27, 2012

Co-ordinated endorsements for Central Bank action had the desired effect on equity markets with a rally to close the week. The ECB announced the prospect of Bond-Buying to target bands for yields to restrict the cost of rising debt. This will effect markets and drive interest rates lower, short term, although the funding of this will rely on printing Euro $. This is inflationary and has the effect of destroying wealth of citizens to bankroll the fundamentally flawed and bankrupt nations.

Merkel has reiterated the need for Greece to fulfill commitments under the bailout clauses but has appeared with Samaras in Berlin to show support. Bernanke, coincidentally, also endorsed further QE action promising delivery of future dope to the addict. It is unlikely that he will act prior to the November Presidential election for fear of Political bias and the ECB is restricted by legal restraints and unity amongst members.

The EUR is trading around the 1.2500 mark and lack of Central Bank action will undermine confidence but action will undermine the EUR. Damned if you do.....!? Markets are very wary of the USD and the EUR as is witnessed by the cross rates. Central Bankers will gather this coming week in Jackson Hole, Wyoming, providing furtile ground for jawboning and markets will be determined by participants. In the US, Durable Goods orders increased by 4.2% buoyed by strong airplane orders thus supporting improved market sentiment.

The rally in equity markets failed to improve the prices of commodites as monetary stimulus does not improve global demand! This is the problem with double dip recession hitting the European market. The AUD drifted lower to trade around 1.0400 and is looking extremely vulnerable to increasingly weaker global markets.

The KIWI has reacted relatively well with soft commodities faring better and the KIWI holding above 0.8100. On to Wyoming!


For more on Collinson FX and market information see:
www.collinsonfx.com and www.collinsonwealthmanagement.com

Countries: | NZ: 0800 338 838 | AU: 1800 143 415 | NY: 1888 6257 833 | UK: 0800 0285 834 |


Disclaimer: The details expressed in this website and accompanying documents or transmissions are for information purposes only and are not intended as a solicitation for funds or a recommendation to trade. Collinson Forex Ltd accepts no liability whatsoever for any loss or damages suffered through any act or omission taken as a result of reading or interpreting any of the information contained or related to this site.

Collinson and Co

Related Articles

Collinson FX Market Commentary - July 27 - Steady trade data ups KIWI
NZ Trade data was steady and allowed for the NZD to push back above 0.7000, while the AUD flirts with 0.7500 The JPY slipped back to 104.70, ahead of the Bank of Japan meeting, while the EUR approached 1.1000. NZ Trade data was steady and allowed for the NZD to push back above 0.7000, while the AUD flirts with 0.7500. All eyes remain on the Fed!
Posted on 26 Jul
Collinson FX Market Commentary - July 24 - Brit's sentimental slowdown
The AUD traded down to 0.7450, while the KIWI consolidated below 0.7000 There may be signs of a slowdown in the British economy as the Composite and Services PMI both plunged, while EU data held steady. This is not as a result of actual circumstances changing but sentiment.
Posted on 25 Jul
Collinson FX Market Commentary - July 22 - RBNZ's words undermine NZD
The AUD slipped below 0.7500, while the NZD surrendered the huge number of 0.7000 The AUD slipped below 0.7500, while the NZD surrendered the huge number of 0.7000, undermined by the RBNZ statement telegraphing further interest rate cuts.
Posted on 22 Jul
Collinson FX Market Commentary - July 21 - It's official, No slowdown
The AUD remains below 0.7500, while the NZD battles to hold the very big number of 0.7000 Oil fell to $45/barrel, leading a raft of commodities lower, putting a ceiling on associated currencies. The AUD remains below 0.7500, while the NZD battles to hold the very big number of 0.7000. Central Bank intentions in Australia and NZ are clear, with NZ LVR's, clearing the decks in preparation for rate cuts.
Posted on 22 Jul
Collinson FX Market Commentary - July 20 - Markets make full recovery
The AUD trades below 0.7500, while the NZD is headed towards 0.7000 RBA minutes provided a great summary of global economic conditions and how they impact the Australian situation. The RBA considered the impact of the Brexit and recognised that markets were back to pre-brexit levels, except the GBP
Posted on 20 Jul
Collinson FX Market Commentary - 19 July - Brexit a boon for Brits?
NZ CPI came in at 0.4%, for Q2, missing expectations. This pushed the currency below 0.7100 The tumultuous weekend of terrorism in France and a failed coup in Turkey failed to unsettle markets. Equities and currencies commenced the week quietly with the USD settling and share markets perched just below highs. QE has provided massive amounts of cheap money to supply equity markets
Posted on 19 Jul
Collinson FX Market Commentary - July 16/17 - French attack hits USD
The NZD was undermined by the RBNZ commentary, which enhanced the effect of a rising reserve The NZD was undermined by the RBNZ commentary, which enhanced the effect of a rising reserve, with the KIWI drifting back towards 0.7100. Geo-Political events are overwhelming economic events, while Central Bank intervention has driven market moves, filling the space of vacuous global fiscal policies.
Posted on 18 Jul
Collinson FX Market Commentary - July 15 - RBNZ's surprise adjustment
The RBNZ surprised many, with an adjustment between cycles The RBNZ surprised many, with an adjustment between cycles, allowing commentary to drive the currency back below 0.7200. The RBNZ never seem to quite get it right in the Monetary Policy realm and this interruption is a correction of the last, ham-fisted, statement
Posted on 14 Jul
Collinson FX Market Commentary - July 13 - Pound surges on confidence
The uncertainty is dissipating and markets are reacting accordingly The GBP surged, with new confidence, pushing to 1.3250. The Japanese PM, Abe, ordered further stimulus from the Bank of Japan and the Yen jumped to 104.75. The Australian Liberals met in Canberra and are awaiting a new cabinet selected by PM, Turnbull. The uncertainty is dissipating and markets are reacting accordingly
Posted on 13 Jul
Collinson FX Market Commentary - July 12 - Commodities and Oil drop
Commodities drifted lower, with Oil falling below $45/barrel, pushing the associated currencies back. Commodities drifted lower, with Oil falling below $45/barrel, pushing the associated currencies back. The AUD traded 0.7525, while the NZD attempts to hold 0.7200. Markets are calm but expect further Central Bank influence over a relatively quiet economic data release week.
Posted on 13 Jul