Please select your home edition
Edition
Collinson and Co

Collinson FX Market Commentary- June 14, 2014 - RBNZ pumps KIWI up

by Collinson FX on 14 Jun 2014
- Day 5, 2014 Toyota Optimist Championships, Manly SC © Richard Gladwell http://www.richardgladwell.com
Collinson FX market Commentary: June 14, 2014

http://itunes.apple.com/app/collinsonfx/id533360650?mt=8!Click_here to find out how to get CollinsonFX's free iPhone app

US Equity markets recovered some lost ground to close a week of losses. The turnaround was a reactive bounce, rather than any fundamental recovery. The University of Michigan Confidence survey, contracted from 81.9 to 81.2, which is further indication the economic recovery is stunted.

The situation in Iraq is starting to spread discomfort in Geo-Political circles and this is being reflected in oil prices. The radical Islamists are overwhelming the incumbent Sh'ite Government and the country is turning into a war zone. This is unsettling for the US and allies who fought so hard to rebuild post-Saddam Iraq. The EUR continued this inexorable decline and traded 1.3540, due to ECB expansionary monetary policies, gifting huge risk free profits to member banks in an effort to clandestinely bail them out of their parlous financial positions.

The GBP is heading in the opposite direction, moving to 1.6975, thanking God they declined the single currency. NZ PMI contracted from 54.40 to 52.7 as the economy suffers the collateral damage inflicted by the Reserve Bank. Interest rate differential pushed the KIWI ever higher and now approaches the 0.8700 mark. NZ Trade will be impacted as the currency hits the all important trade sector hard.

Current Account data and GDP growth will start to reflect the Wheeler Syndrome. The AUD traded around 0.9400, while market turmoil, may impact in the coming week. Geo-Political issues in the Middle East and Europe have potential to upset markets with some local economic data giving daily direction.

Collinson FX market Commentary: June 13, 2014

Sentiment has changed this week with equities hit hard again. Once again, there was little in the way of economic data release, but the bubble is testing all-time record highs. Retail Sales improved but not to the degree expected and Jobless Claims rose.

This did not impact greatly as bad news is often good news, perversely, as the bad news will be greeted with more Central Bank stimulus. The bubble is primed, but the fear now is inflation, which would require the Central Bankers to tighten their massively expansive monetary policies. The RBNZ did just that, as paranoid Governor Wheeler, raised rates once again! He lives in the land of Oz, because this is an attempt to combat the Auckland property bubble, rather than a sustained threat from inflation.

This would be acceptable policy but for the fact that all other Central Banks are easing, thus promoting attractive interest rate differentials, thus the carry trade. The currency is reacting as expected and heading towards 0.8700.

This will hit the trade exposed sectors, which drive the NZ economy and impact borrowing costs locally, hitting business.

The AUD has taken the positive from this and hit 0.9400 supported by strong commodity demand. The EUR continues to wain, trading 1.3550, while the GBP pushes ahead to 1.6840. Markets are nervous with record levels not justified by economic fundamentals.

:


Collinson FX market Commentary: June 12, 2014

Equity markets tumbled with a sudden realisation that all is not well according to the World Bank! The review of global growth from 3.2% to 2.8% is another in a long line of downward moves. The World Bank and IMF continually espouse blue sky forecasts and then backtrack as reality hits home.

The ECB and the USA move post GFC corrupted Keynsian economic policies and run endless deficits to promote socialist polices rather than promote capitalism and self reliance. The result is endless mountains of debt which will destroy the economy.

At some stage the massive monetary expansionism will result in higher interest rates which will result in interest rates that will bankrupt economies. Interest rates will not rise for the right reasons, demand, but supply. At some stage the lure of low interest Fed and ECB debt will disappear and then bond rates will spiral and the GFC will seem a walk in the park. The EURO has been hit hard by the ECB and is self immolating. The single currency is trading 1.3525 and looks set to go lower. The Bank of England has changed course from the Fed and ECB and endeavours to battle back. The GBP recovers towards 1.6800 with a Governor who sees the light.

The RBNZ has no such luck with a leader who lives in Alice in Wonderland. He has raised rates in an attempt to reel in regional real estate bubbles ignoring the cost to the economy. He has raised the cost of capital and hit economic growth. The trade sector will be smashed as the NZD rises due to interest rate differentials and the resultant carry trade. RBNZ has raised rates again with .25% to 3.25%.

Update: RBNZ raised OCR by .25% to 3.25% as expected. RBNZ says high dollar is unsustainable. Kiwi up after announcement.


Collinson FX market Commentary: June 11, 2014

Markets were mixed overnight with slight swings between positives and negatives. The EUR continued to suffer the impact of the ECB's extra-ordinary negative deposit rates and crashed to 1.3540. The initial upward movement has been more than erased as the Central Bank continues massive monetary expansionism and wealth destruction.

The desired impact on trade will be almost immediate but the negative impacts will be more far reaching. UK Manufacturing and Industrial Production continued to recover, giving some support to the GBP, trading 1.6750. Italian GDP continued to contract, reflecting the struggles in the single market, and more especially the Med economies. US markets were steady, with the NFIB Small Business optimism reporting a tepid improvement, reflecting the marginal state of the domestic economy.

The AUD traded around 0.9350, despite a contraction in Job Advertisements and a deterioration in Business Conditions, reflecting some positive economic conditions emerging. The pressure from the RBNZ, to force the NZD lower, has begun to subside with the interest rate differentials encouraging the KIWI back towards 0.8500. Substantial economic data release or Central Bank activity will drive equities, currencies and Bonds for the remainder of this week.

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

Rio 2016 - The Qualification Games - Part 2
Yachting NZ's refusal to nominate in three classes won in the first round of 2016 Olympic Qualification is unprecedented Yachting New Zealand's refusal to nominate in three classes won in the first round of 2016 Olympic Qualification is without precedent. Subject to Appeal, the Kiwis have signaled that they will reject 30% of the positions gained in the ISAF World Sailing Championships in Santander in 2014.
Posted on 22 May
Gladwell's Line - World Sailing changes tack after IOC windshift
Over the past year, we've given the International Sailing Federation (now re-badged as World Sailing) a bit of stick Over the past year, we've given the International Sailing Federation (now re-badged as World Sailing) a bit of stick. Every blow well earned over issues such as the pollution at Rio, the Israeli exclusion abomination plus a few more. But now World Sailing is getting it right.
Posted on 21 May
Rio 2016 - The Qualification Games - Part 1
Antipodean selection shenanigans aside, the Qualification system for the Rio Olympics appears to be achieving its goals Antipodean selection shenanigans aside, the Qualification system for the Rio Olympics appears to be achieving goals set in the Olympic Commission report of 2010. Around 64 countries are expected to be represented in Rio de Janeiro in August. That is a slight increase on Qingdao and Weymouth, but more importantly a full regional qualification system is now in place
Posted on 19 May
Taming the beast-a conversation with Stuart Meurer of Parker Hannifin
While AC72 cats were fast, they difficult to control, so Oracle partnered with Parker Hannifin to innovate a better way. If you watched videos of the AC72s racing in the 34th America’s Cup (2013), you’re familiar with the mind-boggling speeds that are possible when wingsail-powered catamarans switch from displacement sailing to foiling mode. While foiling is fast, there’s no disguising the platform’s inherent instability. Now, Oracle Team USA has teamed up with Parker Hannifin to innovate a better way.
Posted on 18 May
From foiling Moths to Olympic starting lines-a Q&A with Bora Gulari
Bora Gulari’s is representing the USA at the Rio 2016 Olympics in the Nacra 17 class, along with teammate Louisa Chafee. Bora Gulari (USA) has made a strong name for himself within high-performance sailing circles, with wins at the 2009 and 2013 Moth Worlds. In between, he broke the 30-knort barrier and was the 2009 US SAILING Rolex Yachtsman of the Year. His latest challenge is representing the USA at the Rio 2016 Olympics in the Nacra 17 class as skipper, along with his teammate Louisa Chafee.
Posted on 12 May
Concern for Zika at Rio Olympics is now deadly serious
Alphabet soup is one description that has thus far not been used for either Guanabara Bay, Alphabet soup is one description that has thus far not been used for either Guanabara Bay, or the Rio Olympics. Many others have, and they were apt, but things have changed. So here now we have a situation where one man, Associate Professor Amir Attaran, who does have a more than decent string of letters after his name, is bringing nearly as many facts to bear as references at the article's end
Posted on 12 May
The importance of being Alive
Since buying the stunningly pretty Reichel-Pugh canting keel 66-footer, and re-naming her Alive, Since buying the stunningly pretty Reichel-Pugh canting keel 66-footer, and re-naming her Alive, the team have lined up for a lot of things, won plenty and nabbed a record, as well. She’s presently in a yard in the Philippines having a minor refit in readiness for the Australian season. It will commence with the upcoming Brisbane to Keppel and then head sharply into this year’s Hobart.
Posted on 10 May
Zhik - The brand born of a notion, not its history
here is probably every reason that ocean rhymes with notion. Zhik’s tagline is officially marketed as Made For Water There is probably every reason that ocean rhymes with notion. Zhik’s tagline has been officially marketed as Made For Water, and this is precisely what the company has done for the last eight years before the succinct and apt strapline came from out of R&D and into mainstream visibility.
Posted on 8 May
Shape of next Volvo Ocean Race revealed at Southern Spars - Part 1
Southern Spars has been confirmed as the supplier of spars for the 2017-18 Volvo Ocean Race. In mid-April, Race Director, Jack Lloyd and Stopover Manager Richard Mason outlined the changes expected for the 40,000nm Race during a tour of Southern Spars 10,000sq metre specialist spar construction facility. A total of up to seven boats is expected to enter, but time is running out for the construction of any new boats.
Posted on 3 May
Will NZ's most successful Olympic Sailing event cop the Selection axe?
New Zealand qualified in all ten of the 2016 Olympic events at the first round of Qualifying in Santander Spain New Zealand qualified in all ten of the 2016 Olympic events at the first round of Qualifying in Santander Spain in September 2014. In two of those the RS:X Windsurfing event, New Zealand is unlikely to be represented in the Men's event, and in the Women's event, Natalia Kosinska would appear to be a borderline selection.
Posted on 2 May