Please select your home edition
Edition
Collinson and Co

Collinson FX Market Commentary- July 13, 2012 - Consumer confidence up

by Collinson FX on 13 Jul 2012
Image of the Day l’Hydroptère.ch © Loris von Siebenthal/HYDROS

Collinson FX market Commentary: July 13, 2012

The US Budget deficit widened this month as spending and revenue both increased but not proportionately. The continuing deterioration in the US books follow the EU lead and gives the citizens a very unwelcome look in to the future.

European markets were hit by news asian markets have slowed with interlinked global markets locking into a cycle. South Korea had a surprise interest rate cut defining the fears in one of the more dynamic economies in the region. Australian Unemployment rose to 5.2%, which is comparatively good, but considering the mining boom?! Australia should be surging with best-ever terms of trade and should be running surplus as the major beneficiary of the Chinese sensation.

The AUD slipped to 1.0135 after the poor data and markets must look at the inept Government wasting a generational opportunity. The KIWI slipped in unison to below 0.7900 despite a 4.4% rise in Consumer Confidence.

In the US, Corporate earnings continue to disappoint now being impacted by economic conditions globally. Weekly Jobless Claims fell but flagging growth does not encourage optimism. The US gained against the EUR at below 1.2200 but as a safe-haven trade rather than positive economic news.


Collinson FX market Commentary: July 12, 2012

Equity markets continued to fall hit by lower earnings and lower expectations around the Fed's QE programs. European markets have been undermined by further bad news, this time from the IMF. They warned that Italy must 'break the debt spiral' as Spain moved to introduce a new package of fiscal reduction.

Bond levels indicate that these major member nations are at critical tipping points. US markets took the lead and the sentiment was amplified by the release of the Fed's minutes. The key phrase that tipped the negative reaction was 'unusually high uncertainty' with revised growth forecast lower and Unemployment to remain at these high levels.

The US Trade Deficit narrowed by 3.8% but the devil was in the detail! The reason for the contraction was falling Consumer Demand and Lower Oil prices. Weekly Mortgage Applications were also lower by 2.1%.

The Fed's minutes indicated no new QE just a continuation of the operation twist with major warnings regarding the coming fiscal cliff approaching labelled 'Taxmageddon!'. The Dollar slipped and commodities rebounded giving support to the associated currencies.

The AUD rallied to trade 1.02280 and the KIWI 0.7950. Banks are now revising US GDP growth forecast lower to around 1.5% confirming a slump in demand and the filter through to corporate earnings.

This weeks bearish markets confirm the economic slump and the evolving crises creating uncertainty.

Politicians are unlikely to act to address this due to US elections and the patchwork nature of EU Political control. Hard to be optimistic in this environment.



Collinson FX market Commentary: July 11, 2012

The economic slowdown is now impacting the previously sterling corporate earnings. The DOW took a nose dive late in the trading day after initially finding some support after EU Finance Ministers announced pending support for the endangered banking sector. EU Finance Ministers look to release EUR$30 Billion of the EUR$100 Billion announced in the latest banking bailout.

Seems a drop in the ocean despite the enormity of the amounts. The exposure these Spanish Banks have will eat that up in no time! Italian and French Manufacturing and Industrial Production continued to tank with worrying signs across the single market. Monetary largesse has not solved fiscal irresponsibility that has now snowballed out of control. The sheer size of the debt and deficits can only mean collapse in these Southern States.

The problem is too big for the Northern Nations to bail as they would go with them! Profit warnings from major corporates in the US has spooked equity markets with fears of the economic armegeddon impacting Corporate earnings. Small Business Optimism continued to plunge and the US looks to uncertain times with Political stalemate in the lead up to November Presidential elections.

The EUR pushed to new lows at 1.2250. Further risk aversion has put some pressure on the AUD now down to 1.0175 and the KIWI slipping to 0.7925.

NZ Home Sales spiked along with House Prices and now stand at pre-GFC levels fueled by low interest rates and lack of supply. Building costs had overwhelmed reality and existing supplies now are insufficient to supply demand. It is all relative though and real wealth continues to fall across the globe!



Collinson FX market Commentary: July 10, 2012

The earnings season commences after the closing bell in New York with Alcoa. Alcoa surprised markets last go around but will be under extreme pressure with aluminium prices crashing globally and electricity input costs blowing out.This has immediate impact on Aluminium production closures, as experienced in Australia, exasperated by the implementation of the all new Carbon Tax!

Equity markets fell as EU Finance Ministers gather for yet another talk fest to solve the EU debt crises, and more particularly, the single currency. The EUR was trading around lows at 1.2300, under extreme pressure, as Spanish Bonds hit trigger point. Bonds broke through the bailout trigger level of 7% which signalled the bailout of fellow PIIGS nations. Corporate Earnings have been stellar recently but the weaker economic data of late, may start to impact.

The Chinese CPI fell to 2.2% and PPI dropped 2.1%, reflecting a big fall off in demand and growth. The Chinese have acted, cutting interest rates twice in the last couple of weeks. This could be interpreted as panic as the EU crises impacts demand and production. Commodity prices rose, after the Chinese cuts were expected to spike demand for commodities although risk aversion undermined gains in the AUD.

The AUD dipped below 1.0200 with Job advertisements falling. The KIWI followed suit now trading 0.7950. The European crises continues to dominate markets and it would need some fairly radical news to influence sentiment otherwise.

There is no short term fix for Europe, hence the crises continues to unfold and undermine global markets. The US is suffering and the Presidential Election campaign will ensure no radical economic reactionary moves to rectify the situation.

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 - Aug 30 - US Equities rise
The NZD stabilised around 0.7250, while the AUD pushed to 0.7570, despite a dive in New Home Sale (9.7%) US Equities rallied strongly, after markets consumed the Yellen address to Jackson Hole, concluding no rate rise! The Dollar also slipped back, with the EUR moving back to 1.1200, while the GBP traded 1.3115. The Dallas Fed Manufacturing Activity Index plunged 6.2% and with no other major economic data release, markets remained assured that there was no economic threat to demands of a Fed rate
Posted today at 8:33 am
Collinson FX Market Commentary - Aug 28 - The Folly of Jackson Hole
Commodity currencies were impacted by the rising reserve, with the AUD falling below 0.7600, while the NZD crashed to 0. Record liquidity through Monetary Policy has done nothing to stimulate growth but created massive asset bubbles. Fiscal ineptitude is camouflaged by Monetary expansionism. Whomever believes the rhetoric is naive. Jackson Hole is a gathering of Central Bankers where they publicly talk the market up but quietly confirm the propaganda they must recite to markets to hide the problem.
Posted on 27 Aug
Collinson FX Market Commentary - Aug 16 - NZD rallies in expectation
The NZD has rallied back to 0.7200, with anticipated rises in the Dairy Auction result The JPY was steady, trading 101.20, while the GBP slipped back to 1.2875. The NZD has rallied back to 0.7200, with anticipated rises in the Dairy Auction result, while the AUD holds around 0.7670. Look for Central Bank commentary to drive market direction as weak economic data is the new norm.
Posted on 16 Aug
Collinson FX Market Commentary - Aug 12 - NZD slides
Equity markets fell from record highs to close the week after weaker than expected US Retail Sales. The NZD slipped back below 0.7200, while the AUD fell to 0.7650, both still supported by favourable interest rate differentials. The week ahead has plenty of ammunition on the economic data front, lead by CPI data, that will probably confirm weak global growth.
Posted on 13 Aug
Collinson FX Market Commentary - Aug 11 - RBNZ caught out again
The NZD trade around 0.7200, while the AUD tests 0.7700, again. The RBNZ was shocked after the dust settled. They cut rates, as expected, then verballed the currency lower.The markets saw the interest rate differential and acted.
Posted on 12 Aug
Collinson FX Market Commentary - Aug 10 - NZD does a weird rally
he AUD breaching 0.7700, while the NZD moves towards 0.7200. The NZD is rallying ahead of the RBNZ interest rate decision which confounds many as a cut in interest rates is expected. The rate is expected to be cut by to 2%, but this may be too little, too late. The RBA cut rates and the currency has rebounded strongly as interest differentials still prove attractive.
Posted on 11 Aug
Collinson FX Market Commentary - Aug 9 - RBNZ to get the stick out?
Commodity currencies held on to ground, with the KIWI moving back towards 0.7150, while the AUD consolidated around 0.76 Commodity currencies held on to ground, with the KIWI moving back towards 0.7150, while the AUD consolidated around 0.7650. NZ Markets await some expected aggressive action from the RBNZ, while a quiet week will be keenly awaiting the US Retail Sales data.
Posted on 10 Aug
Collinson FX Market Commentary - Aug 8 - Kiwi market chatter over RBNZ
The NZD is supported by interest rate differentials and holds 0.7100, while the AUD trades around 0.7650. NZ Markets are discussing the RBNZ rate decision, which is likely to cut rates, in line with other Central Banks. They would need to do this and indicate further rates to closely follow, to have a serious impact on the currency, as discovered by the RBA!
Posted on 9 Aug
Collinson FX Market Commentary - Aug 4 - USD up, EUR slips, GBP drifts
The stronger reserve triggered a slide in the bloated NZD, which fell to 0.7135, while the AUD stabilised around 0.7575 Markets were steady overnight, as EU Services and Composite PMI data came in slightly above expectations, in line with similar releases in the US and China. The US ADP Employment reported an improvement in private sector jobs. This lead to a rebound in the USD, with the EUR slipping to 1.1150, while the GBP drifted to 1.3320.
Posted on 4 Aug
Collinson FX Market Commentary - Aug 3- Australia cuts rate again
The AUD fell back to 0.7500, but under international consideration, bounced back to 0.7600! The AUD fell back to 0.7500, but under international consideration, bounced back to 0.7600! Central Bank activity has been considered under the global QE. The KIWI has also been buoyant, afflicted by global Monetary Policy, rising above 0.7200. The Reserve currency has reinforced the reality of a weaker global economy, drifting lower, undermined by the Fed.
Posted on 2 Aug