Collinson FX Market Commentary- August 9, 2013 - Kiwi close to break
by Collinson FX on 9 Aug 2013
Collinson FX market Commentary: August 9, 2013
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Denmark 49er FX - Day 4, Oceanbridge Sail Auckland 2013 © Richard Gladwell http://www.richardgladwell.com
Markets broke the three day losing streak with improving news from China, Europe and the US. Improving economic news leads to the commencement of QE tapering which has been driving equities lower. Dallas Fed President Fisher has endorsed cutting the monetary stimulus next month assuming 'economic data doesn't significantly deteriorate' but this did not deter market bulls. The EUR continued to rally, with some steady Trade data from Germany, rising to test 1.3400 and the GBP consolidated at 1.5550.
Chinese Trade data surprised on the upside with Imports and Exports both beating expectations. This was a boon for demand dependent commodity currencies with the AUD testing 0.9100 and the KIWI breaking the big, big figure of 0.8000. Australian Employment remained steady at 5.7% although the situation continues to deteriorate as participation falls and job losses add up.
NZ House Prices continue to surge, rising 8.1%, which worries the RBNZ but they can do little about a lack of supply and high building costs! Central Bank activity will continue to drive markets with economic data influencing their actions.
Collinson FX market Commentary: August 7, 2013
Markets continues to drift lower overnight with further commentary from Fed members, although the Dollar has gone the wrong way. Equities were lower after Cleveland Fed President observed the labour market improvements may warrant tapering and Chicago President Evans would not rule out tapering in September.
The talk of tapering is usually a buy signal for the USD but that has not happened. The EUR rose to 1.3335 and the GBP 1.5500 with slow improvement on the economic front boosting market perceptions. The KIWI took advantage of the falling Dollar recovering some recent losses to trade around 0.7950.
The AUD has also worked to return to the big, big figure of 0.9000 with lower interest rates a boost to the housing market. Central Banks remain the main driver of equities and currencies and a lull in bond activity has calmed markets although is this may be the precursor to the storm?
Newsflash: Reserve Bank of Australia cuts the official cash rate by 0.5% to 2.5%. After the rate cut the AUD rose against the USD
Action aplenty across the markets with local news dominating for a change. The Australian election was called Sunday for September 7th and this will finally give the people a chance to select the PM! The chaotic shambles that Labor has lead Australia through has wasted a mining boom and destroyed the fiscal position and budget.
The Reserve Bank will act monetarily today by cutting rates in an attempt to stimulate a flagging economy, but it will take a 0.5% cut to impact markets. The currency has reflected the deteriorating economic and fiscal conditions, falling from 1.0600 to 0.8900 in the last couple of months. The KIWI has also had shocking news with the Fonterra botulism warning. Dairy is the major reason for NZ success in export rebuilding after the GFC and any major hits are likely to have dire effects on the local economy.
The KIWI reflected this with a break in to the 0.77's but recovered overnight to 0.7800. European markets were steady with some flat PMI data and improving economic confidence. Confidence still remains negative and EU Retail Sales contracted 0.9%. US Markets drifted lower with some good news threatening QE infinity. The ISM Non-Manufacturing Index rose to 56 from 52.2, beating expectations, throwing doubts on the continuation of QE Infintiy which was endorsed by Dallas Fed President Fisher.
Equities dipped although the Dollar was steady with the EUR 1.3250. The GBP rallied to 1.5350 after stronger PMI Services data boosted prospects. All eyes will be on the RBA in local markets and global moves will continue to be determined by Central Bank activity and the economic data that drives them.
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Collinson FX market Commentary: August 5, 2013
The big news to close the week was a miss in Non-Farm Payroll expectations. The markets were expecting 185,000 but received only 162,000, although the Unemployment rate fell to 7.4% due to falling participation. The news was not good, but the markets took it in their stride with little movement after Bernanke's reassurances earlier in the week.
The EUR traded 1.3275 and the GBP 1.5300. Central Bank support from Europe ad the US has reinvigorated equity markets and continue to inflate the bubble. Commodities drifted as demand from China contracts and economic conditions deteriorate. The AUD now broke below 0.8900 after a string of weak economic data and a massive write down in Budgetary conditions.
The Budget is now in crises and with an election looming (SEPT 7TH) it is hard to see these economic vandals being re-elected! The NZD/USD and its crosses have opened the week considerably lower, than its .7850 close on Saturday am, at .7725 as the news from the Fonterra milk powder crisis hits the airwaves....look for more volatility here as events unfold. This week will continue to be dominated by Central Banks with likely cuts from the RBA!
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