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Collinson FX Market Commentary- June 11, 2012 - Strong finish to week

by Collinson FX on 11 Jun 2012
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Collinson FX market Commentary: June 11, 2012

Markets finished the week strongly with further gains in equities and risk assets. The poor economic data and the EU crises has spooked markets through May and expectations of monetary and fiscal stimulus has grown. This has sparked confidence although the Fed and the ECB have resisted the temptation.

Markets will be heartened by the news that EU Finance Ministers have agreed to Bailout Spanish Banks to the tune of EUR $100 Billion! The overkill is an attempt to head of fears off panic and a financial market collapse.

The problem is... that the problem is still there and rapidly deteriorating. The answer seems to be to loan more money.

It is incredible that printing more money and extending further credit to already bankrupt nations is supposed to solve the problem. Address the issues, balance the budgets, and stop adding to already critical debt levels.

The single currency has bounced back to trade over 1.2500 but fundamentally this currency is not viable. Commodity demand also gained with confidence which has pushed the corresponding currencies north.

The AUD moved to break 0.9900 and the KIWI breached 0.7700. The EU crises will continue to drive demand from China and in turn commodities. We thus await the European developments focused on Spain and the inevitable contagion.

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