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Collinson FX Market Commentary- July 26, 2013 - Jawboning the rates

by Collinson FX on 26 Jul 2013
- 2013 420 Nationals Takapuna © Richard Gladwell www.photosport.co.nz

Collinson FX market Commentary: July 26, 2013

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Mixed economic reports in the US have lead to a 'will he ..... won't he?' on the tapering strategy Bernanke has telegraphed for QE Infinity. Durable Goods Orders rose 4.2% and the Kansas City Fed rose 1.4% giving the green light for possible tapering in September as previously indicated.

Jobless Claims rose and the lack of a continuous of improving data may tip the balance in favour of the status quo. Equities were weaker and commodities mixed as the Dollar dipped lower. This aided the EUR which moved back to 1.3250 and the GBP 1.5350 after UK GDP rose 0.6% for the quarter. Britain appears to be slowly emerging from a very tough post-GFC period with a country slowly improving economically as summer has brought buoyant spirits from sporting successes, fine weather and a new Royal!

The Reserve Bank left interest rates unchanged in NZ, with the usual hint at action if the housing bubble continues. Jaw-boning will not impact a market short on supply and long on demand. The Governor should look at the lack of inflationary pressures and growth in the economy and cut rates to stimulate the recovery and reduce the advantages most of its trading partners have been gifted!

The KIWI slipped earlier but surged overnight to trade above .8000. The AUD also suffered in domestic trade but the USD moves pushed the currency back to 0.9230. Economic reports and the impact on Central bank policy will continue to dominate equities, commodities and currencies!


Collinson FX market Commentary: July 25, 2013

Equity markets in Europe rallied overnight after some strong PMI data confirmed growth in both the Manufacturing and Services sector in the EU but this failed to contaminate the US market. US Equities corrected lower after a long string of recent rallies with further speculation surrounding the Fed's tapering program.

New Home Sales rocketed up 8.3% which boosted the the proviso of stronger economic data to enact a tapering of QE infinity. Commodities also drifted lower after China Flash PMI Manufacturing continued to contract falling back to 47.7. This impacted the AUD which declined after earlier domestic CPI showed inflation more than contained. Inflation needs growth and the economy is quickly deteriorating with political turmoil and failing Mining investment.

The effect has been pressure on the RBA to effect more rate cuts and downward pressure on the AUD. After testing the 0.9300 yesterday the AUD has been slammed back to 0.9150! The KIWI has also been impacted despite improving Trade Data (although this was due mainly to a fall in Imports, thus demand!) but not to the same extent as the cross tasman cousin.

The NZD gave up the important big, big figure of 0.8000 test and declined to 0.7930. Markets will continue to trade off economic data releases which will drive perception of Central Bank action. Keep an eye on the RBNZ who are expected to leave rates but may impact through Hawkish comments!


Collinson FX market Commentary: July 24, 2013

Equity markets hit new record highs in the US as the Feds QE Infinity continues to pump endless monetary stimulus, flooding Wall Street. There was little in the way of news releases with headline House Prices rising by 0.7% which was enough to boost equities to record highs and continue the strong demand for commodities.

The AUD has been a major beneficiary of recent gains reclaiming losses and testing 0.9300. The KIWI has also taken advantage, moving towards the psychological 0.8000 and looking strong with some important local trade data likely to give some lead on the external state of the trading nation.

In the US, the Richmond Fed Manufacturing Index declined, continuing the woes of this sector, but this was largely ignored in the equity rally.

Earnings have been mixed this season but all await Apple today, which has the ability to move the markets on its own!


Collinson FX market Commentary: July 23, 2013

Gold rallied strongly with the market realisation that Bernanke had no short term ambitions to end QE infinity.

The Dollar ebbed in conjunction, pushing the EUR up to 1.3180 and the GBP surged to 1.5350 with the Brits ecstatic over the prospect of a new Royal, Cricket ,T de F and anything but the economy. In the US, summer markets continue to trade thinly and await some big news.

They were quiet to open the week with Existing Home Sales falling 1.2% which missed expectations and is the first data release around this leading index. The Chicago Fed's National Activity Index also contracted with little good news but the Fed holds the equity market steady.

Energy prices drifted lower while metals rose with demand. The AUD caught the bounce and received an extra boost from the decline in the USD. The AUD moved back to 0.9230 and the KIWI is approaching 0.7950.

No scheduled Central Bank commentary allows the markets to absorb economic data releases and US earnings.

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