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When the liquidity is withdrawn from the economy, that will be the test and the current volumes should serve as a warning.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 - May 25 - KIWI surges past 70c
The NZD has surged above 0.7000, supported by a sliding reserve, while the AUD attempts to regain 0.7500. The Dollar remained depressed, with the EUR holding 1.1200, while the GBP traded 1.2950. Local markets will digest the NZ Budget, which will likely be an election economic plan, affirming the stronger economy allows delivery. The NZD has surged above 0.7000, supported by a sliding reserve, while the AUD attempts to regain 0.7500.
Posted today at 11:45 am
Collinson FX Market Commentary - May 20-21 - All currencies rise
AUD hitting 0.7450, while the NZD traded above 0.6900 again. The EUR pushed through 1.1200, while the GBP broke above 1.3000, despite weak economic confidence in the Eurozone. The weak reserve enabled commodity currencies, with the AUD hitting 0.7450, while the NZD traded above 0.6900 again. Trumps tour will provide Geo-Political points of issue but may calm the domestic politic.
Posted on 22 May
Collinson FX Market Commentary - May 19 - Pressure off Trump
The AUD held above 0.7400, supported by lower unemployment rate (down to 5.7%), while the NZD slipped back below 0.6900. Markets recovered some of yesterdays lost ground, after an Independent Counsel was appointed to investigate the Russian interference, thereby relieving pressure on Trump. The obstruction charge, that prompted talk of Trumps impeachment, was also questioned. A tape circulated that Comey denied the Presidents intervention.
Posted on 19 May
Collinson FX Market Commentary - May 17 - NZD and AUD all rise
The AUD also continues to rally, consolidating above 0.7400, after the RBA minutes confirmed little change in monetary p The NZ Dairy auction continued to improve, supporting a recovery in the currency, pushing the NZD towards 0.6900. US Housing Starts contracted 2.6%, while Building Permits slipped 2.5%, giving little reason for a Dollar rebound. The AUD also continues to rally, consolidating above 0.7400, after the RBA minutes confirmed little change in monetary policy.
Posted on 17 May
Collinson FX Market Commentary - May 15 - Oil surges after Price Fix
The AUD broke back above 0.7400, in to some clear air, while the NZD held above 0.7850. Oil surged back towards $50/barrel, after Russia and Saudi Arabia struck a deal on limiting supply, looking to push the price up to a higher trading band. US equity markets jumped and the Dollar slipped lower.
Posted on 16 May
Collinson FX Market Commentary - May 13-14 - Budget imbalance
The KIWI (0.6850) has been battered, after the RBNZ indicated accommodative monetary policy would continue The AUD has been under extreme pressure, but quietly moves back towards 0.7400, post Budget. The Australian Budget signalled a different approach to fiscal balance. The Government has been unable to cut some of the expenditure required, being curtailed in the Senate, while political will has dissipated.
Posted on 15 May
Collinson FX Market Commentary - May 12 - Banks sit on their hands
The NZD dropped a big figure, to 0.6828, but recovered overnight to settle around 0.6850 The Bank of England and RBNZ both left rates unchanged, as expected, but associated commentaries were negative. The Bank of England continued current accommodative Monetary Policy and indicated a penchant for rises 'assuming a smooth transition Post-Brexit'! The GBP drifted back to 1.2890, after a recent bull run
Posted on 11 May
Collinson FX Market Commentary - May 9 - Aussies tax banks
The AUD has fallen back to 0.7340, while the NZD slipped below 0.6900, as the reserve recovers. The Australian budget was delivered and changed the focus from a reduction in spending to an expansion of revenue. This is a different approach to the goal of balancing the budget. This is a move away from the ideological 'smaller Government' to expanding tax revenues and avoiding electoral pain.
Posted on 10 May
Collinson FX Market Commentary - May 7 - Macron win expected
The associated currencies were beneficiaries, with the AUD rallying above 0.7400, while the NZD consolidated above 0.690 The EUR trades around 1.1000, so nothing less than a victory for Macron will do, a loss being catastrophic. The only way LePen can make a dent is a strong turnout from the minority, enthusiastic supporters, while inertia is a threat. There is little upside, so most will be square, with a few reckless punters short!
Posted on 7 May
Collinson FX Market Commentary - May 5 - Confidence up on Macron win
The AUD has been the biggest victim, falling below 0.7400, while the NZD dropped below 0.6850. Commodity prices have been under pressure, depressing the associated currencies, which have found no solace in interest rate differentials. The AUD has been the biggest victim, falling below 0.7400, while the NZD dropped below 0.6850. Commodity demand has slipped, hitting energy prices and companies, with soft Chinese demand.
Posted on 4 May