Please select your home edition
Edition
Collinson and Co

Collinson FX Market Commentary- June 13, 2012 - US equity markets lift

by Collinson FX on 13 Jun 2012
Pic of the Day Porto Cervo, Audi Sardinia Cup 2012 Training Day - Quantum Racing AZZURRA/ Carlo Borlenghi and Stefano Gattini http://www.azzurra.it

Collinson FX market Commentary: June 13, 2012

US equity markets rallied on the prospect of further monetary stimulus from the Fed to support faltering global economic conditions.

In Europe Fitch further downgraded 18 Spanish banks which was no surprise to markets. Spanish Bonds hit a new high of 6.807% dragging Italian Bonds up ever closer to the magical 7% considered the trigger for intervention.

The EUR traded around the 1.2500 and the GBP 1.5575 with the Spanish crises climaxing as we approach the all important Greek elections this weekend. This could end badly!? US Markets are now looking forward to further Fed stimulus scheduled to meet next Tuesday after the Greek elections.

QE will trigger further risk appetite in the form of equities and commodities and impair recent USD gains. The stronger Dollar, as a safety play, has impacted trade data with Import Prices falling and Export prices moving up. The NFIB Small Business Optimism Index reflected the weakening economic conditions dropping lower.

Chinese Trade data supported commodity prices and the corresponding currencies. The KIWI outperformed after some strong Housing data showing sales spiking higher and prices improving too.

The NZD rose to 0.7745 and the AUD moved to 0.9930 after briefly testing parity. Commodity countries offer attractive yields and have performed relatvely well of late but are not immune to financial disaster in Europe.

Collinson FX market Commentary: June 12, 2012

Last week's correction rally was the biggest of the year but was sparked by negative news rather than positive economic data.

The 'May Sell-Off' eliminated all the 2012 gains on equity markets and hit asset values as demand plummeted with the European crises materialising.

Last week's gains were directly attributable to market expectations that Central Banks would intervene as global markets unwind which morphed into an intervention in the form of a EU Bailout of the Spanish Banks. The latest domino to fall is Spain, which has requested an EU Bailout while denying it is a bailout, as there are no austerity strings attached.

The semantics failed to impress markets as the latest PIIGS member succumbed. The only one remaining is Italy which must now be in the firing line!?

A new acronym may now be forged but how does the F fit?

The tipping point must be approaching as a greater proportion of nations seek bailout than the few remaining healthier nations. The EU stumped with EUR$125 Billion of further debt to solve the the crises of debt! This is insane, absurd and completely alien to logical economic theory.

Adding further debt will add short term liquidity where necessary but is a tiny band aid on a mortal wound. The EU and ECB has broken all the rules when it comes to economic ratios and reaction in terms of monitisation and lending to critical nations.

The EUR has retraced much of last weeks gains trading 1.2490 and the GBP testing 1.5500 on the downside. The European economy is the biggest market for China so this must impact Chinese growth and demand which will have flow on effects for commodity demand.

This pushed the AUD lower to 0.9880 and the KIWI now looking at 0.7700. It is hard to see last week's rally as anything other than a correction and with the Greek election due on the 17th of June, more volitilty is certain.

The FOMC meeting next week may give some short term relief with further QE but the fundamental crises continues to spiral out of control.


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.

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