Please select your home edition
Edition
Collinson and Co

Collinson FX Market Commentary- March 22, 2014- Currencies lift

by Collinson FX on 22 Mar 2014
Int. A-Class Catamaran World Championship, Day 5, Takapuna NZ Richard Gladwell www.photosport.co.nz

Collinson FX market Commentary: March 22, 2014

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

Markets continued to settle with equities taking advantage of the 'new norm' in Europe. The acceptance of Russian expansionism has changed the balance of global powers with power resting with those prepared to use it rather than capabilities. Economic markets moved on and focused more on the US economy.

Fed Chairman, Yellen, endorsed the recovery in economic activity and proceeded with the tapering process. The Fed has confirmed improved economic conditions and thus reducing the need for monetary stimulus. This has given momentum to the USD with the EUR dropping to 1.3775 and the GBP breaking below 1.6500. US Economic data releases reinforce the recovery with the Philly Fed survey confirming an improvement in Manufacturing activity.

Leading Indicators also reflected economic improvements and improved confidence pushing the reserve currency up and forcing the AUD back to 0.9020 and the KIWI to 0.8515. Look for further Geo-political activity to test vulnerable markets.


Collinson FX market Commentary: March 20, 2014
There were no new developments on the Geo-political front therefore attention turned to economic events. The center of the markets attention was the FOMC meeting and Yellens first press conference as Fed Chairman. She dispelled dovish expectations and continued the tapering of QE Infinity.

She cut a further $10 Billion from the added stimulus in line with dictated policy.She noted the US economy continued to grow, although at a slower rate, due to the harsh winter. She noted that unemployment remained high and removed the 6.5% trigger rate due to the extension of the low interest rate environment. She noted that rates will remain low but envisioned some rate increases later in the year and into 2015.

Inflation remained low allowing the loose monetary policy. This immediately boosted the flagging USD with the EUR dipping back to 1.3866 and the GBP 1.6570. The turnaround extended to the commodity currencies with the AUD retreating to 0.9010 and the NZD 0.8525. The continuation of tapering, will impact the Dollar in a positive fashion, but may have an adverse effect on the Equity bubble.

The good news is the US economy is improving slowly, although growth remains historically low, with Unemployment well above trend. No major developments in the Ukraine, has allowed more settled markets, but they remain vulnerable to upheaval which would see flows to the safety of the Dollar.


Collinson FX market Commentary: March 19, 2014

A wide ranging historical speech by Russian President seemed to alleviate fears surrounding the Ukraine and allowed risk appetite to flood back into equity markets. Markets interpret the Geo-Political pressures relented and allowed markets to consider economic data and Central bank activity. The speech appeared to announce the lack of enthusiasm to split the Ukraine, although he did just this, by announcement of Crimean integration into the Motherland.

It seems he may avoid a split by integrating the whole of the Ukraine! The surge in Equities allowed a boost to the EUR as the USD slips ahead of the FOMC announcement. The fall in the Dollar seems to indicate a halt to tapering although most market pundits assume Yellen will continue.

The GBP bucked the trend, with Bank of England commentary signalling record low interest rates and easing monetary policy, allowing the currency to drop back to 1.6585. In contrast the EUR surged to 1.3925 but remains vulnerable ahead of the 1.4000 mark.

RBA Minutes may signal an end to interest rate cuts which added momentum to rises from a weaker Dollar and improved risk appetite. The AUD rallied to 0.9130 and the KIWI surged to 0.8625. The interest rate differential remains attractive, driving the commodity currencies north, but they remain extremely exposed to a shift in uncertainty, driven by issues in the Ukraine.


Collinson FX market Commentary: March 18, 2014
Geo-Political developments went as expected, with a landslide vote in Crimea to join Russia, away from the Ukraine. The Ukrainian revolutionaries, who overthrew the elected Government, have lost the Russian minorities and are now looking for support from the Motherland.

This referendum went as planned, removing some uncertainty, and markets reacted accordingly. The focus moved to markets and US Industrial and Manufacturing production improved, in the lead up to tomorrows FOMC, two day meeting.

Yellen has indicated that tapering should continue unless there is a serious deterioration in US economic conditions. This will boost confidence, although a suspension in the reduction in stimulus, should continue to inflate the equity bubble.

The EUR broke above 1.3900, giving some validity to possible extension of QE Infinity, and allowing the GBP to hold 1.6630. Risk appetite rose, giving support to the AUD, which is testing 0.9100 dragging the KIWI to 0.8540. These currencies will continue to trade risk and uncertainty with Geo-Political developments in the Ukraine, will continue to dominate markets, with little likelihood of a solution in the near future.

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 - Mar 24 - US tetters on health vote
The NZD held above 0.7000, despite a rising reserve, while the AUD continued to drift lower. The RBNZ left rates unchanged, as expected, observing weaker than expected growth allowing accommodative monetary policy. The Central Bank welcomed the weaker KIWI, while jawboning it lower, to little effect. The NZD held above 0.7000, despite a rising reserve, while the AUD continued to drift lower.
Posted today at 12:21 pm
Collinson FX Market Commentary - Mar 23 - NZD rallies against trend
Commodities continued to lose ground and the AUD suffered, falling below 0.7700, while the NZD bucked the trend. Commodities continued to lose ground and the AUD suffered, falling below 0.7700, while the NZD bucked the trend. The NZ Dairy Auction was surprisingly bullish, paving the way for a rally in the currency, pushing up to 0.7050. The RBNZ will announce the rate decision this morning, with no movement expected, although rhetoric is likely to impact.
Posted on 22 Mar
Collinson FX Market Commentary - Mar 22 - DOW drops 200 points
The AUD fell below 0.7700, after the Bank observed the Feds 'rate rise policy' Oil prices resumed their downward moves, reflecting commodity prices, in general. This did not assist the associated currencies, with the NZD drifting to 0.7020, while the RBA impacted the AUD. The RBA minutes revealed concerns over the growing real estate bubble and weak wage growth, but it was the commentary on the US Dollar that hit the currency.
Posted on 21 Mar
Collinson FX Market Commentary - Mar 20 - GBP slips on Brexit news
The AUD pushed back to 0.7700, while the NZD regained 0.7000, awaiting Mondays Dairy Auction. The GBP slipped after the UK PM, Theresa May, confirmed the trigger of Article 50 on March 29. Oil prices drifted lower and the Chicago Fed Manufacturing Activity Index remained positive. The softer reserve allowed commodity currencies to book further gains, with the AUD consolidating above 0.7700, while the NZD pushed towards 0.7050.
Posted on 21 Mar
Collinson FX Market Commentary - Mar 19 - Handbrake pulled on excess
The AUD pushed back to 0.7700, while the NZD regained 0.7000, awaiting Mondays Dairy Auction. What could have been a tumultuous week, Geo-Politically and Economically, faded into obscurity. The Fed raised rates, as expected, pushing a dovish commentary to calm any excesses. The Dutch election saw the status quo come through virtually unscathed, allowing a massive sigh of relief for the EU, with the anti immigration party also being anti-EU.
Posted on 19 Mar
Collinson FX Market Commentary - Mar 17 - Dutch Brexit fails in poll
The AUD slipped back to 0.7660, while the KIWI drifted back to 0.6970, awaiting the resumption of the Dollar run. The Dutch elections spread relief through European markets after the failure of the far right, anti EU party to live up to pre-poll expectations. The preservation of the status quo, will reduce fears held for the EU, especially considering the pending elections in France and Germany.
Posted on 16 Mar
Collinson FX Market Commentary - Mar 16 - US Int Rate up, Dollar down
The US Federal Reserve raised interest rates, for the second time post-GFC The US Federal Reserve raised interest rates, for the second time post-GFC, confirming the embarkation of a rate rise program for 2017. There were no surprises and the associated commentary confirmed the economic recovery and calmed markets. 'Buy the rumour, sell the fact'! The Dollar retreated after the anticipated rate rise
Posted on 15 Mar
Collinson FX Market Commentary - Mar 15 - Oil prices drop
Oil Prices hit the headlines overnight, falling to $47.70, hitting energy companies and dragging equities lower. Oil Prices hit the headlines overnight, falling to $47.70, hitting energy companies and dragging equities lower. The lower prices are a direct result of oversupply, with global stocks rising, as production does not inhibit. Equities were not assisted with the prospect of rising interest rates, as the FOMC sat down for their two day meeting, with high expectations.
Posted on 14 Mar
Collinson FX Market Commentary - Mar 14 - Big week ahead
AUD back below 0.7600, while the NZD has regained 0.6900 Markets were steady on what could develop into a huge week for currencies. This coming week the UK look to trigger article 50, the 'Brexit' clause, which will impact the GBP. The Dutch go to the elections and a strong showing of the anti-EU parties could adversely impact the EUR, both short term and fundamentally.
Posted on 13 Mar
Collinson FX Market Commentary - Mar 11-12 - KIWI recovers above 69c
Commodity currencies regained some ground, with the AUD back to 0.7550, while the KIWI jumped back above 0.6900. The Dollar has been on a bull run, which is likely continue, when the Fed embarks on a rate rise program for 2017. The Dollar settled to close the week, with the EUR jumping to 1.0690, supported by stronger than expected German trade data. Commodity currencies regained some ground, with the AUD back to 0.7550, while the KIWI jumped back above 0.6900.
Posted on 12 Mar