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 - Aug 16 - NZD rallies in expectation
The NZD has rallied back to 0.7200, with anticipated rises in the Dairy Auction result The JPY was steady, trading 101.20, while the GBP slipped back to 1.2875. The NZD has rallied back to 0.7200, with anticipated rises in the Dairy Auction result, while the AUD holds around 0.7670. Look for Central Bank commentary to drive market direction as weak economic data is the new norm.
Posted on 16 Aug
Collinson FX Market Commentary - Aug 12 - NZD slides
Equity markets fell from record highs to close the week after weaker than expected US Retail Sales. The NZD slipped back below 0.7200, while the AUD fell to 0.7650, both still supported by favourable interest rate differentials. The week ahead has plenty of ammunition on the economic data front, lead by CPI data, that will probably confirm weak global growth.
Posted on 13 Aug
Collinson FX Market Commentary - Aug 11 - RBNZ caught out again
The NZD trade around 0.7200, while the AUD tests 0.7700, again. The RBNZ was shocked after the dust settled. They cut rates, as expected, then verballed the currency lower.The markets saw the interest rate differential and acted.
Posted on 12 Aug
Collinson FX Market Commentary - Aug 10 - NZD does a weird rally
he AUD breaching 0.7700, while the NZD moves towards 0.7200. The NZD is rallying ahead of the RBNZ interest rate decision which confounds many as a cut in interest rates is expected. The rate is expected to be cut by to 2%, but this may be too little, too late. The RBA cut rates and the currency has rebounded strongly as interest differentials still prove attractive.
Posted on 11 Aug
Collinson FX Market Commentary - Aug 9 - RBNZ to get the stick out?
Commodity currencies held on to ground, with the KIWI moving back towards 0.7150, while the AUD consolidated around 0.76 Commodity currencies held on to ground, with the KIWI moving back towards 0.7150, while the AUD consolidated around 0.7650. NZ Markets await some expected aggressive action from the RBNZ, while a quiet week will be keenly awaiting the US Retail Sales data.
Posted on 10 Aug
Collinson FX Market Commentary - Aug 8 - Kiwi market chatter over RBNZ
The NZD is supported by interest rate differentials and holds 0.7100, while the AUD trades around 0.7650. NZ Markets are discussing the RBNZ rate decision, which is likely to cut rates, in line with other Central Banks. They would need to do this and indicate further rates to closely follow, to have a serious impact on the currency, as discovered by the RBA!
Posted on 9 Aug
Collinson FX Market Commentary - Aug 4 - USD up, EUR slips, GBP drifts
The stronger reserve triggered a slide in the bloated NZD, which fell to 0.7135, while the AUD stabilised around 0.7575 Markets were steady overnight, as EU Services and Composite PMI data came in slightly above expectations, in line with similar releases in the US and China. The US ADP Employment reported an improvement in private sector jobs. This lead to a rebound in the USD, with the EUR slipping to 1.1150, while the GBP drifted to 1.3320.
Posted on 4 Aug
Collinson FX Market Commentary - Aug 3- Australia cuts rate again
The AUD fell back to 0.7500, but under international consideration, bounced back to 0.7600! The AUD fell back to 0.7500, but under international consideration, bounced back to 0.7600! Central Bank activity has been considered under the global QE. The KIWI has also been buoyant, afflicted by global Monetary Policy, rising above 0.7200. The Reserve currency has reinforced the reality of a weaker global economy, drifting lower, undermined by the Fed.
Posted on 2 Aug
Collinson FX Market Commentary - July 30-31- US growth well short
The NZD now looks to test 0.7200, confounding the impotent RBNZ, while the AUD challenged 0.7600 The Dollar crashed after the GDP numbers, with the EUR trading 1.1180, while the GBP hit 1.3230. The failure of the Fed to implement telegraphed rate rises, has hit the Dollar as the reserve, triggering support for commodity currencies despite weakness in demand. The NZD now looks to test 0.7200, confounding the impotent RBNZ, while the AUD challenged 0.7600.
Posted on 1 Aug
Collinson FX Market Commentary - July 29 - Italy sweats on stress test
This took the shine off the recent rally in the NZD which slipped back to 0.7060 The JPY remains firm, trading around 105.25, in preparation. Commodity demand was slack on the energy and agricultural front, while metals eked out some gains. This took the shine off the recent rally in the NZD which slipped back to 0.7060, while the AUD continued to toy with the 0.7500 mark.
Posted on 30 Jul