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Collinson FX Market Commentary- January 11, 2013 - Gradual Recovery?

by Collinson FX on 11 Jan 2013
Leonard Takahashi-Fry returns to Nelson Yacht Club after winning the Tanner Cup . ..

Collinson FX market Commentary: January 11, 2013

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Markets continued to to wipe out any losses sustained earlier in the week after some good news from China and positive talk from Europe. Chinese Exports rose 14.1% to new highs but these numbers seem questionable considering the demand side of the equation.

It is not hard to be skeptical of some of the economic data although the directional indications should be noted. The EUR rallied to 1.3250 dragging the GBP to 1.6150 after ECB President left rates unchanged and predicted Economic Activity would 'gradually recover'. The question of course is how gradual?Without a recovery the unemployment rate should provoke further social upheaval leading to political pressures.

The Bank of England also left rates unchanged but these Central Banks have their backs up against the wall. Commodities continued to recover pushing the AUD to trade around 1.0550 and the KIWI 0.8400. Thin trade could mean any meaningful events could trigger a reaction and a break out either way may see technical traders hop on the boat!


Collinson FX market Commentary: January 10, 2013
Equity markets rebounded after two days of consecutive falls. US markets remain nervous over Corporate earnings but many of these fears were dispelled with Alcoa. The Aluminium manufacturer beat expectations and reviewed future prospects higher. This was a boon to markets with little happening on the Political budget front. In Europe, German Industrial Production remains weak, down 2.9% for the year, in line with the fall in recent export data. The EUR holds 1.3050 but would suffer any further weak economic data and Political uncertainty.

NZ Building Permits fell 5.4% but New Home Sales rose 4.7% reflecting the state of the housing market. Home Sales and Prices are skyrocketing with a serious supply issue exaggerated by the prohibitive cost of building. The KIWI rose to 0.8380 with the AUD breaching 1.0500 despite a fall in Retail Sales. Weekly Mortgage Applications fell 11.7% in the US, contradicting the much vaunted recovery in this all important sector.

Earnings will continue to dominate day to day markets with economic data giving insight in to the state of the recovery and the environment which corporates operate. The Gorilla has the strange name of 'Debt-Ceiling'!



Collinson FX market Commentary: January 9, 2013

European markets continued the negative trend with the release of a huge volume of economic data. EU Retail Sales fell along with Consumer Confidence. EU Business, Industrial and Economic Climates have all taken a cold turn with Employment hovering at 11.8%. Retail Sales continued to fall and German Factory Orders slipped 1%. These are all headline economic data releases and all show an Economic Zone entrenched in recession, which will be difficult to recover from.

In the US, NFIB Small Business Optimism remained steady at 88 but still reflects the weakness in this all-important sector. The Equity markets continued to return last weeks gains with the prospect of the earnings season kicking off with Alcoa. The earnings season is not expected to be over bullish as Corporate earnings will reflect the tough economy and lack in investment.

The EUR returned recent gains to trade back at 1.3065 and the GBP 1.6050. The Australian Trade Balance continued to deteriorate as global demand weakens although the relative strength of the economy and attractive interest rate differentials supported the currency just under 1.0500.

The KIWI rides along with the 'least worst' trade holding just over 0.8300. Earnings and Economic data will continue to dominate the market direction this week but watch for Political developments which could cause major changes in conditions.


Collinson FX market Commentary: January 6, 2013

The New Year rally continued at the close of the week sparked by the Fiscal Agreement in Congress. The reality will sink in and markets will look at the next round with the Debt Ceiling negotiations very close on the Horizon.

The fiscal irresponsibility will drive the the US to the edge and any spike in interest rates will put them over. The Fed indicated a propensity to begin to raise rates later in the year if conditions continued to improve. This has given some backbone to the USD pushing the EUR back to 1.3070 and the GBP 1.6060. This did not effect the commodity currencies as confidence exploded and pushed commodity prices north.

The AUD looks set to test 1.0500 although the KIWI receded from initial gains to settle above 0.8300. This coming week is a huge week for Economic data releases in Europe, the US and Asia which may well impact daily, especially with any surprises. ECB and Bank of England rate decisions will monitored closely later in the week. Political developments will drive the undercurrent of sentiment.

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