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Collinson FX Market Commentary- March 27, 2013 - Confidence returns

by Collinson FX on 27 Mar 2013
Bull Rush - 2013 Auckland Cup, Day 2 © Richard Gladwell www.richardgladwell.com

Collinson FX market Commentary: March 27, 2013

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Fears over the Cyprus crises subsided in Europe despite Fitch Rating Agency putting them on a 'Negative Watch'. The Banks are scheduled to open again tonight and that will be strictly controlled to avoid a run on deposits.

It would seem unlikely anyone would be confident enough to leave their funds in there and this could be visually disastrous for other Banks in neighbouring troubled states. The EUR slipped back to 1.2850 and the GBP held steady around 1.5150. US equity markets rallied to new highs after the European crises became more controlled and with some strong domestic economic data.

The Case Shiller Home Price index exploded improving 8.1% although this was slightly tempered by New Home Sales falling 4.6% for the month.Durable Goods Orders rebounded to rise 5.7% reflecting a growing confidence from the Consumer although the confidence measure fell.

The return of confidence boosted the higher yielding AUD back towards the 1.0500 testing critical technical levels on the upside. The KIWI followed, aided by improving Trade Balances. Exports rose and Imports held steady continuing the improving, good economic news of late.

The NZD looks set to test 0.8400 levels in the very near future!


Collinson FX market Commentary: March 26, 2013

Precedents are being set in Europe as the Troika ignore their own rules once again. A new deal has been banded togeather to bail out the recalcitrant Cyprus which breaks foundation rules regarding deposits and bonds. Why do we care?

This undermines faith in the institutions designated to give just that! The adhoc and previously illegal actions of the ECB, have undermined faith in the concept. Currency unity is a completely stupid idea without fiscal union and who would trust the EU to run policy?

The EUR took a hammering after initial confidence slipped. The single currency dropped back to 1.2850 as the GBP treads water at 1.5150. The sitiuation in Europe has highlighted the vulnerability of the single market and the associated currency.

Higher yielding commodity currencies have survived the hit to market confidence with the AUD trading 1.0450 and the KIWI 0.8350. Analysis will reveal the parlous state of Europe and the impact on markets who also need a long hard look in the mirror!

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