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Collinson FX Market Commentary- February 15, 2013 - Frightened Bulls

by Collinson FX on 15 Feb 2013
New Zealand Finn Nationals, Takapuna, February 2013 © Richard Gladwell www.richardgladwell.com

Collinson FX market Commentary: February 15, 2013

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Equity markets remained in flux after the economic news from Europe put the frighteners on the bulls. German and French exports fell in the last quarter as the currency wars started to impact any seeds of the economic recovery. EU GDP contracted 0.9% with Germany, France and Italy all falling dragging the recession deeper in to the mire.

The 'Currency Wars' are starting to impact the Export driven recovery and the unstable nature of currencies have reduced certainty and thus planning. Central Banks have only themselves to blame in a cynical game of hypocrisy driving all free markets in to turmoil. This has massively impacted the trading nations and especially non-interventionist such as NZ and Australia (easing but not on the epic proportions of BoJ,ECB and the Fed!).

The deeper recession is bad news for all economies as global demand weakens hitting Chinese manufacturers and associated commodity suppliers. The EUR fell back to 1.3333 and the GBP to 1.5480. Buffett and 3G announced the takeover of iconic Heinz and US Airways merger created the worlds largest airline but these activities were overshadowed by EU news.

The Japanese economy also contracted 0.1% contradicting recent bullish sentiment and other Asian markets will also fell the effects. The AUD remained high overnight trading 1.0370 after some positive Consumer Confidence data released locally and the KIWI booked gains around 0.8480 overnight. European demand is huge for China so this will flow through to the ANZACs. Gloomy horizons, but this is historical data!?!

Collinson FX market Commentary: February 14, 2013

The State of the Union address went well with Obama calling for bi-partisanship and some new investment (code for spending). Bi-partisanship for the unnanointed, means agreeing with Obama's progressive, liberal policies or having to face the music.

There was nothing new in his vision for the USA, bar raising the minimum wage by 25% and some more stimulus spending. No surprises there, but the DOW drifted from 5 year highs after some disappointing economic news. Retail Sales remained flat after the consumer was hit with rises in Tax and Gas prices. Weekly Mortgage Applications continued to contradict the much vaunted recovery in the housing market, falling 6.4%! EU Industrial Production rose 0.7% for the month boosting confidence and equities but remains negative 2.4% for the year.

The EUR gained to 1.3450 as the GBP slipped back to 1.5550 after inflation data confirmed a problem. A G7 statement released before the G7/G20 meeting reiterated their support for market driven currencies contradicting the actions of the member nations. The 'currency wars' being waged by the Central Banks from the US, EU and Japan are hypocritical in the extreme.

The beneficiaries of this interventionist monetary policy, are the AUD (1.0350) and the KIWI (0.8390). Currency gains are a hammer blow to exports and this is severely impacting the recovery . NZ Treasury forecasts continue to confirm a slow recovery and a relatively strong currency so no relief in sight!

Look at the G7/G20 meeting for some claptrap and weak economic data globally to continue. Asia remains quiet during Chinese New Year.


Collinson FX market Commentary: February 13, 2013

Equity Markets rebounded to test the crucial 14,000 level on the Dow. The Dow has tested the 14,000 level over the last few weeks cementing the importance, on a Technical level, and making it a crucial top which mat lead to a surge upwards if breached seriously.

Europe remained quiet with little emerging from considerations from the EU Finance Ministers. US markets await the 'State of the Union' address from Obama in a few hours to outline his new strategy for the USA. It is likely to be aggressive and deluded as he doubles down on the failed policies of the his previous administration. He has no electoral constraints and his liberal love of progressivism will build the Government into an overwhelming behemoth.

The increase of spending, tax and borrowing should seal the deal on the road to European Socialism.

The EUR traded 1.3450 and the GBP 1.5650 with little happening in the currency markets. NFIB Small Business Confidence improved marginally in the US but economic data is likely to reflect the parlous state of the worlds largest economy.

The KIWI trades strongly at 0.8415 after a 21% rise in House Sales although the Home Price index retraced 1%.

In Australian the currency regained the 1.0300 level with business confidence rising but economic conditions look extremely vulnerable with an incompetent managers. Look for developments in Europe and the US to provide direction during the Chinese New Year week of festivities!


Collinson FX market Commentary: February 12, 2013
EU Finance Ministers gather in Brussels to discuss weighty financial problems facing the single market. At the top of the list is Greece and Cyprus and the state of the bailouts. The size of these countries have enabled the EU to afford continued bailout for the greater good, but the sheer magnitude must be scaring many.

Cyprus has applied for bailout for more than the total GDP of the country! This is beyond most reasonable peoples comprehension and dwarfs even the extent of the Greek intervention!

In the US, markets are looking forward to the State of the Union delivered by Obama Tuesday night. This will set out the agenda for his new administration and talk on the street is he will call for more stimulus. Incredible as it may seem, he is set to advocate for more spending to improve the economic situation. Keynes must be doing back-flips and somersaults in his grave with the corruption of his economic theory!

The EUR traded 1.3415 and the GBP 1.5675 with equity markets slipping with quiet market action. The Chinese New Year will mean a quiet trading week across Asia and a focus on Europe and the US. The KIWI continues to trade strongly around 0.8350 with Home Prices continuing to rise with a move up of 6.2%. Australian Home Loans contracted 1.5% as the AUD slipped below 1.0300.

A quiet week is expected although Political surprises cannot be underestimated!


Collinson FX market Commentary: February 11, 2013

EU Leaders met and reached an agreement on cutting the budget after pressure from Britain's PM Cameron.

This is the first meeting since Cameron floated the EU 'withdrawal boat' and leaders would be trying to accomodate the British to maintain unity. The EUR traded lower around 1.3350 and the GBP 1.5800, with many analysts wary of the Unions slip back to crises mode. In the US, the Trade deficit contracted surprising many but a fall in demand is hardly a reason to celebrate. The new week will look at Political developments in Europe with a G20 Finance Ministers meeting.

These gatherings usually achieve results as opposed to the Leaders meeting which is a photo-opportunity! A good look at growth (or lack thereof!) from Europe and Japan and Retail Sales in the US will all influence markets.

The AUD fell below 1.0300 after the RBA reviewed growth numbers lower although commodity prices inflated the AUD after Chinese Export data confirmed a surge.

The KIWI held 0.8350 reflecting the weakness in the reserve currency rather than any inherent domestic strength

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