Please select your home edition
Edition
Collinson and Co

Collinson FX Market Commentary- June 21, 2012 - Operation Twist II

by Collinson FX on 21 Jun 2012
Image of the day l’Hydroptere will make a world speed sailing record attempt from Los Angeles Francis Demange www.hydroptere.com

Collinson FX market Commentary: June 21, 2012

The long awaited FOMC meeting came to a conclusion and Bernanke held a press conference announcing Operation Twist II. The Fed has again reviewed Growth prospects lower and Unemployment higher as they have done for the last few years.

Modelling is almost always more bullish so perhaps the Fed's models should be re-examined. It is a worldwide trend for Treasuries and Central Banks to overestimate headline economic data with fanfare but the reviews lower are downplayed.

Operation Twist Mark II is benign as interest rates, both long and short dated, are at extreme record lows. The challenge is credit lending and the banks ability to push this out to consumers and business. The two problems are the lack of demand, from a lending perspective, and the quality of credit prospects. Stocks dropped after the appearance of Bernanke with realisation that Central Bank intervention is limited and perhaps fiscal rectitude is a pursuit Politicians should employ and endorce.

The USD received a boost from the inaction with the EUR falling to 1.2650 and the GBP below 1.5700. Risk appetite has taken a hit with weaker economic outlooks although being supported by interest rate differentials and some relatively steady economic news in Australia.

The AUD traded 1.0150 and the KIWI slipped back to 0.7950 with some weak Current Account numbers released yesterday. The housing market is a retardant to the global market recovery and Australia is now beginning to suffer with a big fall.

Housing starts dropped 12.6% which seems an enormous drop!? An extended housing recession has killed the economic recovery in the US and threatens to totally destabilise Europe through the Spanish Banks. The 'Good News' is a Greek Government has been formed but for how long and with what effect. They should have been cut loose long ago along with recalcitrant banks!

Collinson FX market Commentary: June 20, 2012

The Fed began their two day meeting today and all expectations are for monetary stimulus in the form of an extension to 'Operation Twist'. The rally built on these expectations has been strong suggesting even further moves may be likely.

Economic data from the US has deteriorated to the extent the Fed will feel obligated to move although solutions must be forthcoming from Europe.

The G20 continues to concentrate on the EU debt crises and advocating growth and banking union readying for closer fiscal and political union. The liklihood will be moves to extend austerity measures into the future and relaxing terms. The full effect of this will be further 'can kicking' and failure to address the real issues.

The biggest pressure remains on the Germans to do more but they will be reluctant to pledge their tax dollars to bailout failed co-member nations. The German ZEW Economic Sentiment report remains an important indicator and this has collpased to negative 16.9 from 10.8!

The EUR reacted with a rally to 1.2715 and the GBP 1.5750 as markets sell the USD with further expansion of liquidity expected in the States. In the US, Housing Starts dropped 4.8% but this was balanced by a surge in Building Permits.

It is hard to see much in the way of positive economic news although the rally in equities and commodities continues to be fueled my stimulus. This has benefitted the higher yielding currencies with the AUD recovering to test 1.0200 and the KIWI now having a look at the big figure 8!

Central Banks and Politicians are talking a strong game but this does not change the fundamentals in the house of straw.

Collinson FX market Commentary: June 19, 2012

The political climax of the Greek elections has come and gone. The G20 meet in Mexico, which is ironic considering the mayhem realised by this nation over the last few years.

The problem with relying on politicians is their inability to lead. The Greek situation is likely to deteriorate as victory is hollow and unlikely to solve the current crises. The teat, that the socialist mass has been sucking on, has run dry.

The simple concept of 'living within their means' is too foreign to a land of socialist utopia. The problems will continue and will spread like cancer to Spain and other PIIGS nations.

The EUR rallied on the news, pushing up to 1.2575 and the GBP to 1.5650. Commodity currencies are major beneficiaries of this dramatic economic/political news and are becoming the new safety play.

The AUD bolted through parity to trade at 1.0115 and the KIWI breaking 0.7900. Major upheavals await, with the Fed likely to announce concerted central bank intervention to test the theory of monetary ineptitude. Printing even more money will not work, but the fiscal conundrum has overwhelmed political leaders. Put the seat belt on!

Collinson FX market Commentary: June 18, 2012

Markets rallied strongly to close the week but for all the wrong reasons. Equities and Commodities all had strong gains but not through market confidence or growing global demand but from expectations of Central Bank intervention.

The AUD blew through parity to trade well above 1 and the KIWI booked gains to trade 0.7870. The crescendo is nigh with storm clouds gathering across the EU and contagion spreading to global markets.

The G20 meet this week and talk of a co-ordinated central bank intervention pumping the banks with yet further liquidity. This will work but is completely destroying the real value of money. We have seen US wealth dissappear over the last years and the Fed is to blame.

The Central Banks across the Globe have held off to monitor the Greek elections and stand ready for massive reaction should the Greeks undermine the EU. The only answer now is the monetary action which only enriches Banks and encourages bloated and inefficient financial institutions.

The greatest fear is the 'run on Banks' which has commenced in Greece and Spain. The EU is said to make an important announcement regarding more long term solutions which must include greater fiscal and political union to match the single currency. Secondary to this will be economic data which has been in serious decline of late.

US Housing will be important but expectations are not high.

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 - Dec 10/11 - Trump Rally leads upsurge
The NZD closed the week above 0.7100, while the AUD trades around 0.7450 The 'Trump Rally' continued unfettered by speed bumps from the Italian referendum and the ECB inaction. Rampant confidence is driving the US economy, with the prospect of a booming regime under President Trump, with promised tax and regulatory cuts.
Posted today at 11:21 am
Collinson FX Market Commentary - Dec 9 - NZD climbs against all
The NZD has been a beneficiary of all the good news, pushing back to 0.7150 The NZD has been a beneficiary of all the good news, pushing back to 0.7150, while the AUD has traded 0.7450 despite weak GDP growth data. Commodities remain a strong story only contained by a rising reserve.
Posted on 9 Dec
Collinson FX Market Commentary - Dec 8 - Australian economy struggles
The currency recovered some of the losses overnight, to trade 0.7470, while the NZD consolidates above 0.7125. The Australian economy is struggling and the contraction in economic growth is a historical symptom of this. The currency recovered some of the losses overnight, to trade 0.7470, while the NZD consolidates above 0.7125. Action and rhetoric from the ECB will drive markets overnight, with the Fed next week expected to turn the page on QE infinity, rising from the ashes.agnation and disruption.
Posted on 8 Dec
Collinson FX Market Commentary - Dec 7 - EU mired in stagnation
AUD sets out around 0.7450, while the NZD attempts to hold 0.7100. The AUD may come under pressure from expected weak GDP data today, but sets out around 0.7450, while the NZD attempts to hold 0.7100. The threats impacting the global economy are coming from Europe and Central Bank activity is being driven by economic fundamentals. The Fed is in a completely different cycle, with economic demand and growth, while the EU remains mired in stagnation and disruption.
Posted on 7 Dec
Collinson FX Market Commentary - Dec 6 - NZD recovers post Key
The NZD lost ground on the news, but also recovered overnight, to trade 0.7150. The NZD lost ground on the news, but also recovered overnight, to trade 0.7150. The AUD had slipped with the rising safety-play of the reserve, but found ground, heading back towards 0.7500! watch out for the RBA decision, with no action expected, although associated commentary may impact the currency! Onwards and upwards for markets and the Dollar remains king!
Posted on 6 Dec
Collinson FX Market Commentary - Dec 3/4 - European mayhem
AUD back up to 0.7445, while the NZD breached 0.7100. The EU is descending in to mayhem and France and Germany may seek to salvage what they can and retreat from goals of globalisation. Oil continues to bank gains, post-OPEC, leading a commodity revival. This has been enhanced by the softening reserve, with the AUD back up to 0.7445, while the NZD breached 0.7100. Onwards and upwards for markets and the Dollar remains king!
Posted on 4 Dec
Collinson FX Market Commentary - Dec 2 - The (US) Dollar remains king!
The AUD regaining 0.7400, while the KIWI stalled around 0.7050. The Dollar was steady, but remains bid, with the EUR trading 1.0625 and the Yen 114.40! The GBP has fared well, moving back to 1.2600, as a kindred spirit to a Trump USA. The commodity currencies have solidified, with the AUD regaining 0.7400, while the KIWI stalled around 0.7050. Onwards and upwards for markets and the Dollar remains king!
Posted on 1 Dec
Collinson FX Market Commentary - Dec 1 - OPEC defies pundits
The AUD lost a big figure, to trade below 0.7400, while the NZD slipped to 0.7075. OPEC have defied all the sceptics and done a deal! The Cartel have agreed to cut Oil production by 4.5%, allowing Oil prices to surge towards $50/barrel, feeding Energy companies. This is huge news in the energy space but solidarity will have to be seen to be believed!?
Posted on 1 Dec
Collinson FX Market Commentary - Nov 30 - Oil drops to $45/barrel
NZD breaks 0.7100, while the AUD looks towards 0.7500 OPEC confidence is low, with a diverse group not expected to agree to any supply restrictions, pushing Oil back to $45/barrel. The USD has settled into a lull, which has boosted resurgent commodity prices, as growth drives demand. The associated currencies have been beneficiaries, with the NZD breaking 0.7100, while the AUD looks towards 0.7500.
Posted on 30 Nov
Collinson FX Market Commentary - Nov 29 - Iran undermines oil price
The KIWI has spiked back to 0.7050, while the AUD has pushed to 0.7460 Oil prices are being watched closely, with OPEC meeting this week, all keenly awaiting the outcome. Iran has re-entered the market and this has undermined any supply caps previously agreed.
Posted on 29 Nov