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Collinson FX Market Commentary- July 31, 2013 - Aussie takes a bath

by Collinson FX on 31 Jul 2013
Sam Barnett and Zak Merton - 2013 420 Nationals, Takapuna © Richard Gladwell http://www.richardgladwell.com

Collinson FX market Commentary: July 31, 2013

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Markets were treading water in anticipation of the FOMC meeting scheduled for a decision tomorrow. This should be a big day, with the all-important Fed meeting and crucial GDP data and the ADP Jobs Report. These three events, individually have the ability to move the market, so any uniformity of results could result in a big move.

The Fed is expected to begin to taper QE infinity by September so confirmation of this may have already been built in. Flagging GDP and falling Job prospects could signal a reversal of this tapering prospect but weakness and committment to easing would bring negative impact to equities, commodities and currencies (except for the USD)! The USD was creeping north in the lead up to the eagerly awaited announcement with the EUR 1.3250 and the GBP 1.5240.

The AUD took a bath yesterday, falling from 0.9200 to 0.9160 after Building Permits collapsed by 6.2% for the month and 13% annually! The economic news and the plunge in mining investment sparked dovish comments from the RBA Governor Stevens. The flagging economy may attract a rate cut at the next Central Bank meeting which undermined the Ozzie!

The KIWI lost some shine, after being tarred by the same brush, dropping below 0.8000 but blowing through 0.8800 in the cross v it's troubled trans-Tasman cousin.

All eyes on the Fed and GDP with ECB and BofE still to come this week! Non-Farm Payroll will ice the cake Friday!


Collinson FX market Commentary: July 30, 2013

Markets opened the new week with a hang-over from recent equity gains. US Markets were disappointed when the Pending Homes Sales contracted by 0.4% sending mixed signals in an industry considered a leading indicator. This week is all about Central Banks with the FOMC meeting tomorrow and ECB and Bank of England later in the week.

The other major driver for markets will be the Employment reports culminating with Non-Farm Payrolls. Tapering is expected to start in September and there has been plenty of warning so whether this impacts, we will have to see.

The Dollar was steady with the EUR 1.3250 and the GBP 1.5350. Commodities were mixed and expectations of Dollar gains have pushed the AUD back below 0.9200 and the KIWI barely holding 0.8000.rrencies and commodities will be driven by Central Bank action, commentary and market perceptions. It will be a huge week and expectations are for volatility


Collinson FX market Commentary: July 29, 2013

Markets remained flat with debate raging over whether the Fed will commence tapering of QE Infinity. Consumer Confidence surged to 85.1 from 83.9, reflecting a growing confidence in the banal economic recovery which could signal the 'beginning of the end' of Monetary Expansionism.

The week ahead holds prospects of huge moves in Currencies and Equities with Central Banks from the US and Europe taking center stage. The direction of Monetary policy is the major driver of market direction. If the Fed indicates a propensity to instigate a taming of QE then we may see the start of a long term rise in the US Dollar. It would probably impact equities negatively with the reduction in the avalanche of money.

The EUR has reached 1.3275 and the GBP 1.5390 with the diluted Dollar but this may change. Growth numbers and Jobs Reports in the US will also impact market direction.

The KIWI continues to surge, looking to test the 0.8100 level, but will come under considerable pressure if the USD worm turns. The AUD has also benefited a resurgence after recent tests of the important 0.9000 levels. The AUD settled to close around 0.9250 and will look to the new week for short term directional drivers.

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