Please select your home edition
Edition
Collinson and Co

Collinson FX Market Commentary- July 12, 2013 - A dose of reality

by Collinson FX on 12 Jul 2013
Elliott 7 - 2013 Auckland Cup, Day 3 © Richard Gladwell www.richardgladwell.com

Collinson FX market Commentary: July 12, 2013

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

The Central bank domination of the markets continued with Bernanke adding to the minutes with a commentary aimed at verbal stimulus to reinforce QE infinity. He could not have been more aggressive in his language with this ..'Highly accommodative monetary policy for the foreseeable future' and 'we're not going to step on the brakes'.

This language is designed to impress the markets with the Fed's commitment. Verbal will work short term, but fundamentally the economy will not improve with corruption of the monetary system! Equities continued to rally as Wall Street fed off the boom stimulus but the drugs will stop and the wall is hard. The EUR rallied as the USD subsided with the promise of more printing.

The EUR jumped to 1.3100 and the GBP towards 1.5200. This is a massive leap in risk as the Dollar subsides due to the destructive policies of Bernanke. Locally the AUD reacted accordingly, rising towards 0.9300, but later settling back below 0.9200 as local reality sets in!

The KIWI also booked gains, rising to above .7900 before revisiting below .7800 and settling at .7830, but sustained considerable losses in the cross rates. Central Bank Jaw-boning was effective once but economic reality will destroy the bull-run!


Collinson FX market Commentary: July 11, 2013

The crises in Eqypt continues unabated which has hit Oil hard, now rising to over $106 which will have a negative impact on input costs and disposable income. Higher Oil prices act like a giant tax on the economy and hits all aspects from the Consumer to Manufacturing.

The only beneficiary is the energy sector with these companies able to improve margins, short term, and opens previously too expensive options. Equities drifted in the face of rising energy costs and with the Fed minutes release. The Fed minutes are expected to endorse the tapering process outlined by Bernanke as the economy slowly improves. The EUR continues to fall, now back to 1.2850, and the GBP 1.4925. Chinese demand is expected to fall with exports and imports dropping as the credit crunch impacts.

A dramatic fall in exports should push commodities lower but general economic confidence had boosted the AUD back towards .9200 before falling to 0.9120 and the KIWI to 0.7800. Vulnerabilities in demand and withdrawal of Central bank intervention spell danger for commodity currencies so be prepared.

The Fed has observed that several members endorse tapering, as Employment conditions continue to improve. The improving economic realities must overwhelm the reduction in QE for equities to perform. It is hard to see the global recovery gain much short term momentum.


Collinson FX market Commentary: July 10, 2013
Equity markets continued the recent bull-run with sentiment on the improve as an acceptance of marginal tapering, which provides continued QE for the forseeable future. The shock will come when reality bites and Central Banks will realise the consequences of the record breaking monetary largesse! The EUR has drifted lower, despite the rising confidence, with the single currency falling below 1.2800.

The GBP fell to 1.4870, wiping out recent gains, after Manufacturing Production fell 2.9% and Industrial Production also down 2.3%. There is little good news out of Europe and Bond yields in the PIIGS nations are once again on the march. The IMF has again reviewed Global growth lower from 3.3 to 3.1%. The US growth has been downgraded from 1.9% to 1.7% and they have recommended continued QE. This is a terrible growth rate for the US but has failed to dampen the positive sentiment.

Equities are on the rise after Alcoa beat expectations opening the earnings season. Aluminium demand is improving and so are earnings expectations which has reinforced positive sentiments across the markets. It is hard to have faith in this rally considering the economic situation and the fiscal crises that faces most western countries which have been supported by record breaking monetary recklessness. Commodities found support with rising US confidence and the KIWI rallied to 0.7840 with rising credit card spending and Home Prices.

The AUD also found support from the markets despite weakening Business Conditions and Confidence. Business is struggling and these reports hit record lows reflecting the decline in investment in Mining. The AUD is again testing 0.9200 but this is externally driven and vulnerabilities remain!


Collinson FX market Commentary: July 9, 2013
Markets continued to feed off last weeks positive Jobs data from the US and equities continued to rally strongly. European markets fed of the US lead despite weaker German Industrial Production and falling EU Investor Confidence. Positive news from Greece and Portugal also added to confidence and the EUR stabilised at 1.2875 and the GBP 1.4960. US Markets continued to rally strongly with Alcoa kicking off the earnings season this week.

The stronger Jobs data and acceptance of controlled tapering from the Fed has added to confidence prevailing in the US economic recovery. This has allowed the safety play to settle the Dollar and Bond Yields have also calmed recent spikes. Commodities rebounded and so did the associated currencies with AUD rebounding to just over 0.9100 despite Job Ads falling and unemployment on the rise.

Domestic data is certainly secondary in cause/effect on the currency. Employment is set to deteriorate in line with recent economic domestic data. The KIWI also recovered from the lows to test 0.7800 with local House Sales and Prices flattening out. Central Banks will continue to dictate market direction although local data and US earnings will also have impact.


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 - June 30 - Calm heads lead recovery
Markets are regaining sanity with the return of reason. The Brexit has not changed anything The U.K. will focus on alternative markets, with Commonwealth members lining up at the door, restoring historical trade links. The EU have failed to enact any substantial trade agreements globally, with negotiation of bureaucrats taking years, stalling market expansion. This has been one of the main problems of a protectionist Union and now Britain will be free!
Posted on 30 Jun
Collinson FX Market Commentary - June 29 - Dust settles on Brexit
The dust is starting to settle post Brexit. Equity markets are regaining some lustre as reality dawns. The dust is starting to settle post Brexit. Equity markets are regaining some lustre as reality dawns. The British PM met with European leaders, bring a certain reality home, while warning of an amicable divorce. Markets are looking for certainty and confidence, while the Dollar charges on.
Posted on 29 Jun
Collinson FX Market Commentary - June 28 - Europe bleeds post-Brexit
European equities continue to haemorrhage, suggesting the Brexit may impact the EU more than the UK The EUR held steady on 1.1000, despite safety flows to the USD and Yen. European equities continue to haemorrhage, suggesting the Brexit may impact the EU more than the UK, shedding almost 12% in the two post Brexit fallout. The FTSE has only dropped 6% since the poll, while US markets even less, with risk of further exits in the offing.
Posted on 28 Jun
Collinson FX Market Commentary - June 26 - Europe is biggest loser
The Brexit is a bigger disaster for the EU than the UK. The British are now free to pursue trade, globally The Brexit is a bigger disaster for the EU than the UK. The British are now free to pursue trade, globally, assuming the greatest trade nation status it once occupied. Buy GBP's! More exports for NZ and Australia! The Dollar was the safe haven play as expected.
Posted on 25 Jun
Collinson FX Market Commentary - June 25 - Markets initially hope IN
Markets traded as if 'remain' had won the brexit referendum, as polls and odds indicated Markets traded as if 'remain' had won the brexit referendum, as polls and odds indicated, with equities surging and the Dollar surrendering recent gains. The results will be out soon enough, but the implications are clear, with the GBP surging to 1.4915. The retreat in the Dollar was reflected across the board, with the EUR rising to 1.1350
Posted on 24 Jun
Collinson FX Market Commentary - June 23 - Markets on eggshells
Brexit remains the only issue driving markets overnight. Brexit remains the only issue driving markets overnight. Yellen, the Fed President, completed her second day in front of law makers. She cited the disastrous Non Farm Payrolls numbers last month, referring to it as 'transitory', confirming interest rate rises. Rhetoric is fairly empty. although hugely important to markets, driving the Dollar lower.
Posted on 24 Jun
Collinson FX Market Commentary - June 24 - Waiting for Brexit
Brexit remains the only issue driving markets overnight. The Dollar is treading water, ahead of the Brexit vote, with the EUR holding below 1.1300 and the JPY crawled above 104.00! The GBP remains below 1.4700, recovering with the resurgent 'remain' campaign, although the race will be tight. Bookies are overwhelmingly with the status quo, so it is hard to see a radical result, unfortunately.
Posted on 23 Jun
Collinson FX Market Commentary - June 22 - Brexit swing spooks Brits
The KIWI hit year highs, around 0.7169, but retreated back to 0.7150. The AUD breached 0.7500 overnight, but settled back around 0.7470, driven by a drifting Dollar. The KIWI hit year highs, around 0.7169, but retreated back to 0.7150. All eyes remain on the UK vote, which will consume markets for the entire week, with the latest polls driving currencies and equities.
Posted on 22 Jun
Collinson FX Market Commentary - June 21 - Brexit poll points to stay
UK Brexit polls turned sharply over the weekend, surging in a reversal, leaning back to the remain campaign. Commodity prices regained some momentum, bolstering the associated currencies, pushing the NZD to 0.7100 and the AUD to 0.7450. This is a week where the referendum will dominate markets and change seems unlikely. The dire warnings and pressure internally and externally are overwhelming.
Posted on 21 Jun
Collinson FX Market Commentary - June 18 - Bookies tip Brits to stay
The KIWI has attracted further interest, post GDP, trading around 0.7050. The aftermath of the murder of the Yorkshire MP has left an unnatural silence hanging of the suspended Brexit debate. The intermission is likely to end in a subtle finger pointing from the 'stay' campaign, as desperation rises, to combat polls. The bookies still have the remain mob winning, which is probably likely, as change is more difficult.
Posted on 19 Jun