Please select your home edition
Edition
Collinson and Co

Collinson FX Market Commentary- July 6, 2012 - China, Europe cut rates

by Collinson FX on 6 Jul 2012
Image of the day Abu Dhabi Ocean Racing make repairs to their damaged keel fairing in the Volvo Ocean Race village, in Galway, Ireland Ian Roman/Volvo Ocean Race© http://www.volvooceanrace.com

Collinson FX market Commentary: July 6, 2012

China set the Central Bank ball rolling with a cut of 25 basis points. This theme was continued in Europe with the ECB cutting rates to a record low 0.75%. The Bank of England joined the party with GBP50 Billion further security purchases.

ECB Head, Draghi , cited 'continued weak growth' and 'downside risks materialised'. The phraseology reflects the dire state the EU finds itself in and was in line with market expectations. Further monetary stimulus globally will help short term but erodes wealth as Central Bank balance sheets bloat like a dead cow in the hot European summer sun.

Spanish and Italian Bond yields continued to rise towards record highs and test the viability of these toxic states. In the US, markets digested the expected round of Monetary stimulus but this was already built into expectations. The negative comments did not inspire with the EUR falling to 1.2380.

The ADP Jobs report showed an increase of 176,000 jobs in the private sector beating the expected 105,000. Weekly Jobless also fell 14,000 and Challenger Job Cuts fell 9.4%.

This bodes well for the all-important Non-Farm Payrolls with low expectations around 100,000. The ISM Services reported further falls following recent trends in economic data.

Commodity currencies held onto gains with the AUD trading just below 1.0300 and the KIWI 0.8040.

All eyes are now on the Non-Farm Payrolls and the politically sensitive Unemployment number.


Collinson FX market Commentary: July 5, 2012

July the 4th, Independence Day, sees markets are at a virtual standstill. US Markets are all closed and European trade is so thin they may as well be. This week will see lower than normal volumes as many take advantage of a mid-week holiday to extend the vacation.

European markets edged lower as did the EUR trading 1.2535 and the GBP 1.5600. Italian Debt to GDP hit 8% from 3.8% confirming serious budgetary issues coming to the fore. Expectations are high for monetary stimulus from the ECB in the form of a rate cut and perhaps further securities purchases. In the US markets are keenly awaiting the Jobs reports over the next couple of days.

The Challenger and ADP reports come out tonight and the all important Non-Farm payrolls Friday. The markets will react strongly to these and the political implications will be heard wide and far on the Presidential Election campaign. Commodity currencies remain strong with the AUD testing 1.0300 buoyed by the expected monetary stimulus in the EC and US. This will boost currency and commodities and was further enhanced by the latest strong economic news.

Retail Sales increased by 0.5% trumping all expectations and far exceeding market predictions by more than double! The series of surprisingly strong data is adding to the currencies attraction as a 'safe-haven' play after being a risk off trade for many a year. The KIWI holds 0.8040 after tagging along on the Aussie coat-tails.


Collinson FX market Commentary: July 4, 2012

The eve of Independence Day in the US has seen extremely light trading with only a half day trade in New York and many participants taking the opportunity to have an extended break. Rallies in equities and commodities were based on the hope of further central bank intervention after weak economic data and a bubbling European crises.

The ECB is expected to act this week and perhaps the Bank of England will throw the market a bone. Commodities rallied with the weakening of the Dollar. Further monetary stimulus will push equities and commodities north with the latest addicts fix sated. This boosted the associated currencies with the AUD approaching 1.0300.

In addition to market move further surprising economic data has provided a boost. The Australian Building Applications surged 27.3% surprising all and the latest shock to the upside in economic data. The recent news has satisfied the RBA who left rates unchanged as expected.

The KIWI approaches 0.8050 aided by growing risk appetite recently. US markets jumped on a rise in Factory Orders contradicting the fall in Manufacturing. Markets will remain quiet until Thursdays open in the US and close attention will be paid to the ECB and BoE decisions and the all important jobs reports from the US.


Collinson FX market Commentary: July 2, 2012

Markets surged at the close of the week with some positive news from the EU summit. Member nations acted decisively to solve the Banking crises enveloping Spain and other EU Banks.

The decision was to use the bailout funds (EFSF and ESM) to directly fund the banks instead of filtering it through the Sovereign nation. This avoided any conditions in terms of austerity to Spain in particular. This directly contravenes all EC rules but I guess they are there to be broken. Members also decided to launch a stimulus package directly funding growth packages.

Equity markets surged across Europe and the US with the perceived solution to the crises. It seems that more debt and borrowing is the solution to the debt/deficit crises!? US markets rallied strongly with the surge of confidence despite some weak economic data.

Consumer Sentiment fell as did the Chicago PMI. Commodities took advantage of the rise in confidence and associated currencies rallied strongly.

The AUD surged to 1.0240 and the KIWI tested just under .8000. This week we will focus back on economic data with the EU Summit behind us. A particular focus will be the various employment reports out during the week in the US.

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 - July 22 - RBNZ's words undermine NZD
The AUD slipped below 0.7500, while the NZD surrendered the huge number of 0.7000 The AUD slipped below 0.7500, while the NZD surrendered the huge number of 0.7000, undermined by the RBNZ statement telegraphing further interest rate cuts.
Posted on 22 Jul
Collinson FX Market Commentary - July 21 - It's official, No slowdown
The AUD remains below 0.7500, while the NZD battles to hold the very big number of 0.7000 Oil fell to $45/barrel, leading a raft of commodities lower, putting a ceiling on associated currencies. The AUD remains below 0.7500, while the NZD battles to hold the very big number of 0.7000. Central Bank intentions in Australia and NZ are clear, with NZ LVR's, clearing the decks in preparation for rate cuts.
Posted on 22 Jul
Collinson FX Market Commentary - July 20 - Markets make full recovery
The AUD trades below 0.7500, while the NZD is headed towards 0.7000 RBA minutes provided a great summary of global economic conditions and how they impact the Australian situation. The RBA considered the impact of the Brexit and recognised that markets were back to pre-brexit levels, except the GBP
Posted on 20 Jul
Collinson FX Market Commentary - 19 July - Brexit a boon for Brits?
NZ CPI came in at 0.4%, for Q2, missing expectations. This pushed the currency below 0.7100 The tumultuous weekend of terrorism in France and a failed coup in Turkey failed to unsettle markets. Equities and currencies commenced the week quietly with the USD settling and share markets perched just below highs. QE has provided massive amounts of cheap money to supply equity markets
Posted on 19 Jul
Collinson FX Market Commentary - July 16/17 - French attack hits USD
The NZD was undermined by the RBNZ commentary, which enhanced the effect of a rising reserve The NZD was undermined by the RBNZ commentary, which enhanced the effect of a rising reserve, with the KIWI drifting back towards 0.7100. Geo-Political events are overwhelming economic events, while Central Bank intervention has driven market moves, filling the space of vacuous global fiscal policies.
Posted on 18 Jul
Collinson FX Market Commentary - July 15 - RBNZ's surprise adjustment
The RBNZ surprised many, with an adjustment between cycles The RBNZ surprised many, with an adjustment between cycles, allowing commentary to drive the currency back below 0.7200. The RBNZ never seem to quite get it right in the Monetary Policy realm and this interruption is a correction of the last, ham-fisted, statement
Posted on 14 Jul
Collinson FX Market Commentary - July 13 - Pound surges on confidence
The uncertainty is dissipating and markets are reacting accordingly The GBP surged, with new confidence, pushing to 1.3250. The Japanese PM, Abe, ordered further stimulus from the Bank of Japan and the Yen jumped to 104.75. The Australian Liberals met in Canberra and are awaiting a new cabinet selected by PM, Turnbull. The uncertainty is dissipating and markets are reacting accordingly
Posted on 13 Jul
Collinson FX Market Commentary - July 12 - Commodities and Oil drop
Commodities drifted lower, with Oil falling below $45/barrel, pushing the associated currencies back. Commodities drifted lower, with Oil falling below $45/barrel, pushing the associated currencies back. The AUD traded 0.7525, while the NZD attempts to hold 0.7200. Markets are calm but expect further Central Bank influence over a relatively quiet economic data release week.
Posted on 13 Jul
Collinson FX Market Commentary - July 9 - RBNZ's dance macabre
The NZD continued to surge, testing 0.7300, following the 'dance macabre' of the RBNZ Chinese data is also due for release but no surprises are expected, as usual! The NZD continued to surge, testing 0.7300, following the 'dance macabre' of the RBNZ. The AUD traded up to 0.7575, while the USD was steady, with the EUR 1.1050 and the GBP 1.2950. The Bank of Japan's inaction, with the JPY trading 100.50, will no doubt be rectified in the short term!
Posted on 12 Jul
Collinson FX Market Commentary - July 8 - RBNZ inaction lifts KIWI
RBNZ promised more restrictions on housing while warning any further rate cuts 'could pose financial stability risk'! The RBNZ promised further restrictions on housing while warning any further rate cuts 'could pose financial stability risk'! The green light saw the KIWI rally against most currencies. The AUD retreated, falling to 0.7460, after S&P lowers the outlook from stable to negative.
Posted on 8 Jul