Please select your home edition
Edition
Collinson and Co

Collinson FX Market Commentary- December 5, 2012 - Equity markets flat

by Collinson FX on 5 Dec 2012
Image of the Day Windsurfing Heaven - Phuket King’s Cup 2012

Collinson FX market Commentary: December 5, 2012

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

Equity markets were flat overnight with no earth shattering news to move the needle. Obama rejected the Republicans offer for a deal on the Fiscal Cliff insisting that taxes be raised on upper income earners. The soap opera will continue until the last minute allowing a less than satisfactory result to be accepted as an emergency measure like all solutions under Obama.

Increased taxes and spending will come exasperating the already critical debt/deficit situation and driving the once great US towards socialist Europe. In Europe EU Finance Ministers met to slap another plaster on the gaping wound and the EUR traded 1.3090.

The Global Economic position did not fill the RBA with confidence as they cut rates to a record low emergency level. 3% is the level of rates post-GFC and reflects the RBA's view of Global demand with storms gathering in Europe and the US.

This had little impact on the currency which actually rose to 1.0475 as expectations were met. Look for Australian economic data to drive local markets today and Eco-Political developments in the US and Europe longer term.



Collinson FX market Commentary: December 4, 2012

China's Manufacturing rose with the PMI breaking above 50, showing expansion in the sector. This is good news for growth and demand. In Europe Greece announced a debt buy back program to reduce the crippling debt that is drowning the country and dragging the EU with it.

Merkel also hinted that the Germans may accept debt write-off into the mix which further boosts the bailout package. It also removes what little credibility the EU had in terms of the single currency and rules surrounding member nations. Merkel will pay a price politically in next years elections for Greek bailouts and could pay the ultimate political price. In the US, Manufacturing contracted with the ISM falling below the all-important 50 to 49.5! This surprised many bulls who have been talking the sector higher but is instead likely to signal a trend of poor economic indicators as the economy slips back in to recession.

Theatrics continue with the Fiscal negotiations and nothing serious is likely to evolve until the deadline is upon them at years end. The drama is part of the political game being acted out with a solution likely, but that solution likely to be detrimental to the US and Global economy. Taxes will rise and the necessary cuts are likely to be largely ignored.

The EUR rallied on the news to 1.3050 and the GBP to 1.6100. Commodity currencies drifted despite the rally in risk assets with a string of weak economic data and prospects of an interest rate cuts in Australia. Australian PMI fell along with Retail Sales and Job Advertisements all confirming the deterioration in the local economy as costs rise and mining returns fall.

The RBA is likely to cut interest rates today which will relieve recent upward pressures on the currency. The KIWI tested 0.8200 although the AUD looks set to test 1.0400 on the downside. Look out for the RBA decision today to impact local markets with accompanying commentary likely to be food for thought!

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 - Sept 23 - USD continues to sag
NZD clings on to 0.7300. The AUD has pushed above 0.7650, but drifted in late trading, despite a weakening Dollar. The ECB and RBNZ continued the inaction of the Fed and the Bank of Japan. The RBNZ has left rates unchanged and seemed content with local economic conditions. The Jaw-boning of the currency continued, but to no avail, as the currency holds around 0.7300.
Posted on 24 Sep
Collinson FX Market Commentary - Sept 22 - Bank flicks policy
Commodity currencies moved higher, with the AUD testing 0.7600, while the KIWI consolidates above 0.7300. Markets were dominated by the Fed and the Bank of Japan overnight. The BoJ was the first cab off the rank, announcing a complete upheaval of the Banks Central Bank monetary policy. The attempt is to control asset growth and interest rates through monetary manipulation.
Posted on 22 Sep
Collinson FX Market Commentary - Sept 21 - Dairy Auction stunts KIWI
The New Zealand Dairy Auction revealed a halt in recent rises, stunting the currency The Dollar remained steady, with the EUR trading 1.1150, while the GBP slipped below 1.3000. The New Zealand Dairy Auction revealed a halt in recent rises, stunting the currency, with the KIWI attempting to hold 0.7300. Australian consumer confidence was steady, which was reflected in the currency, which traded around 0.7550. All eyes remain on the Fed and the Bank of Japan!
Posted on 21 Sep
Collinson FX Market Commentary - Sept 20 - Bloomberg bats for KIWI
Bloomberg has come in to bat for the KIWI, offering justification for the relative currency strength Bloomberg has come in to bat for the KIWI, offering justification for the relative currency strength, citing the 3.6% GDP number. This will undermine any argument the RBNZ has to cut further, but look at comparable interest rates?? The NZD trades around 0.7300, while the AUD holds around 0.7550, fighting a rising reserve.
Posted on 20 Sep
Collinson FX Market Commentary - Sept 18 - RBNZ decision factored in?
The AUD fell below 0.7500, while the NZD dropped to 0.7250, perhaps anticipating the coming RBNZ rate decision!? The Pounds momentum seems to be in reverse, with the Dollar aiding to the dovish Bank of England monetary policy. The coming week will not be a huge one for economic data releases, so expect further speculation, with regards Central Bank activity. The AUD fell below 0.7500, while the NZD dropped to 0.7250, perhaps anticipating the coming RBNZ rate decision!?
Posted on 19 Sep
Collinson FX Market Commentary - Sept 16 - US shrinks while NZ grows
The NZD also rallied back to 0.7300, boosted by the reserve and better than expected GDP growth The NZD also rallied back to 0.7300, boosted by the reserve and better than expected GDP growth, while Manufacturing PMI was steady. Data just confirms speculation on Central Bank moves and markets will focus on the Fed and Bank of Japan announcements next week!
Posted on 16 Sep
Collinson FX Market Commentary - Sept 14 - Opportunity for new theory
The NZD fell more than a big figure, back to 0.7230, while the AUD languished at 0.7450. Oil jumped back to $47/barrel, but the spike was not a boost for commodities in general, more a reaction to supply issues. The NZD fell more than a big figure, back to 0.7230, while the AUD languished at 0.7450. Economic fundamentals are obviously weak, precluding any return to normal monetary policy, allowing the academics to invent new economic theory?!
Posted on 14 Sep
Collinson FX Market Commentary - Sept 10/11 - Presidents create chaos
AUD slips to 0.7540, while the NZD is now testing 0.7300 on the downside The prospect of a rate rise spurred the Dollar against the commodity currencies, with the AUD slipping to 0.7540, while the NZD is now testing 0.7300 on the downside. The coming week is light on economic data release, although Central Bank influence will remain, driving currencies and equities.
Posted on 12 Sep
Collinson FX Market Commentary - Sept 9 - Europeans create surprise
The European Central Bank surprised markets overnight by leaving interest rates unchanged The European Central Bank surprised markets overnight by leaving interest rates unchanged and resisting the temptation to further expand Quantitative Easing. This pushed equities lower and supported the EUR as the USD rallied across the board. The EUR traded 1.1250, while the GBP slipped back to 1.3300, halting the recent rally.
Posted on 10 Sep
Collinson FX Market Commentary - Sept 8 - Equity markets drift
The AUD traded 0.7440, while the NZD continued to rally, breaking through 0.7400! Equity markets drifted on a low information day. The Feds Beige Book confirmed weak wage growth and benign economic conditions, which confirms the economic mantra, with slow growth and no inflation. Central Bankers are confounded by the economic conditions after the most expansive monetary policy in history
Posted on 9 Sep