Please select your home edition
Edition
Collinson and Co

Collinson FX Market Commentary- July 25, 2012 - Negative credit watch

by Collinson FX on 25 Jul 2012
Image of the Day Micah at mark three - PWA Fuerteventura Grand Slam day 4 © John Carter / PWA http://www.pwaworldtour.com

Collinson FX market Commentary: July 25, 2012

Fear gripped European markets after Moody's put Germany, Netherlands and Luxembourg on negative credit watch. The news is grim indeed as these are the nations that have been the bastion of support while all around fall.

EU Officials have also revealed further restructuring of the Greek debt ahead of the troika assessing the progress on austerity measures. The restructuring means further extension of bailout funds which have already overwhelmed the balance sheet. Greece is beyond the point of no return and continued support is an effort to keep the single currency whole.

The black hole is swallowing up billions and the appetite will not be sated. The EUR slipped to 1.2050 and Spanish Bond yields surged. The 10 year breached 7.5% and the 5 year overtook this causing markets to sit up and take notice!

Contagion spread across European markets and to the US. Equities collapsed and risk appetite crashed. This hurt the AUD which dropped to trade 1.0215 and the KIWI to 0.7850.

The Richmond Fed's Manufacturing Activity reported further weakness falling from flat to negative 17! The European news is hitting demand globally which is impacting China and the US. The flow on is falling demand which must impact commodity prices and thus associated currencies.

The AUD plunged as a result with risk not that attractive. All eyes remain on the EU with the crescendo building and something has to give!

Collinson FX market Commentary: July 24, 2012

European markets hit the panic button with a freeze on short selling. This is a red flag and was reflected in equity and bond markets. Spanish and Italian bonds hit new highs with spreads at record levels. US and German bonds plunged with the panic flight to safety with short dated bonds reaching negative yields in some quarters. It appears that the EU is fast approaching critical levels and just now cut Greece loose in the vain hope of saving Spain and Italy.

Realisation must be nigh that the single currency is disfunctional and must now be abandoned in its current form. It may be the Germans leave and and sacrifice the advantage of a weak currency for economic stability. The price of the EUR is far to high a political price to pay for responsible citizens. EU consumer confidence fell further to 21.6 reflecting the serious doubts held by the citizens.

The US followed European markets although equities rallied on the close after the Chicago Fed shows national activity continued to decline. On the corporate earnings front Maccers missed expectations meaning that even the consumers stomachs are beginning to turn.

The higher interest rate yields provided by the AUD failed to find support as risk outweighed greed. The AUD fell to 1.0280 and the KIWI dipped below 0.7900. Technicals now point to the edge of the cliff and if these levels are breached then we have major market adjustments.


Collinson FX market Commentary: July 23, 2012

Equity markets gave up some of the week's gains after more fears over the European debt crises spread across global markets. The focus remains on Spain as EU Finance Ministers approved the Bail Out package for Spanish Banks.

The lack of EURO's seems to spook markets in the more traditional banking run scares. Valencia has indicated it will seek Government Bailout and now the focus will be on the necessity for an additional Sovereign Bail Out. The Greek debacle will also return to the fore with further bailout advances due in August and their failure to meet austerity requirements. The departure of Greece from the Euro may release some pressure although the fundamental dis-functionality remains.

China has indicated intervention to prevent real estate speculation with the economic slowdown now looking to prick the bubble. US Markets fell with little economic news allowing the focus to revert to Europe.

Commodities drifted lower with demand pushing the AUD back to 1,0370 and the KIWI back under 0.8000. The EUR continued lower to 1.2160 after the Spanish 10 year bonds hit 7.27% threatening the very existence of the single currency.

Markets will remain attentive of the EU debt crises while looking closely at US Housing and GDP growth.

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 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
Collinson FX Market Commentary - July 30-31- US growth well short
The NZD now looks to test 0.7200, confounding the impotent RBNZ, while the AUD challenged 0.7600 The Dollar crashed after the GDP numbers, with the EUR trading 1.1180, while the GBP hit 1.3230. The failure of the Fed to implement telegraphed rate rises, has hit the Dollar as the reserve, triggering support for commodity currencies despite weakness in demand. The NZD now looks to test 0.7200, confounding the impotent RBNZ, while the AUD challenged 0.7600.
Posted on 1 Aug
Collinson FX Market Commentary - July 29 - Italy sweats on stress test
This took the shine off the recent rally in the NZD which slipped back to 0.7060 The JPY remains firm, trading around 105.25, in preparation. Commodity demand was slack on the energy and agricultural front, while metals eked out some gains. This took the shine off the recent rally in the NZD which slipped back to 0.7060, while the AUD continued to toy with the 0.7500 mark.
Posted on 30 Jul