Please select your home edition
Edition
Collinson and Co

Collinson FX Market Commentary- May 23, 2013 - USD up - all else falls

by Collinson FX on 23 May 2013
Elliot 7 - 2013 Auckland Cup, Day 3 © Richard Gladwell www.photosport.co.nz

Collinson FX market Commentary: May 23, 2013

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

This is the new reality of markets where Bernanke controls their direction through Monetary policy. The markets ignored economic data and all movements through the week were geared on what Bernanke would say. Equities rose on the prospect of expected 'no change'.

The Dollar rose as confidence returns to the US market and Bond yields rose despite the record liquidity reflecting an appetite for return on investments. Commodities fell as a measure of the strong reserve currencies, as did associated currencies. This is the current state of market moves and the dependency upon the Fed. Earlier equities rose to record levels as the Fed released pre-prepared minutes indicating a 'premature withdrawal of QE would put the economic recovery at risk'. New records were hit and the Dollar remained steady!

Bernanke appeared and a couple of variations from the statement set the cat amongst the pigeons! His language introduced 'tapering' and 'step-down' of QE as employment recovery remains strong and sustained. There was mention of partial withdrawal as soon as June. The Dollar surged and equities crashed as fear spread across markets.

The EUR plunged from 1.2990 to 1.2830 and the GBP dropped 150 points! Monetary Policy now controls markets but Central Bankers fear the creep upwards of Bond Yields as the canary chirps away! A rebellion against Global QE is underway but remains a guerrilla movement at present! EU Leaders meet in Brussels to discuss subjects of weight and the dire state of the economic recession will dominate, with little in the way of answers and more in the way of photos! In the US, Weekly Mortgage Applications plunged 9.8% and Existing Home Sales missed expectations rising only 0.6%.

Economic fundamentals are improving slowly in the US and requires further QE, although the size of the Fed's Balance Sheets is the largest on record and scares the hell out of the Central Bankers. The commodity currencies reacted to the markets accordingly, with the AUD falling from 0.9820 to 0.9680, initially ignoring the collapse in local Consumer Confidence.

The NZD also suffered trading just under 0.8200 until the Dollar rally. The fallout sees the KIWI now trading 0.8050 with little doubt regarding vulnerabilities due to moves by the Fed! Will the Fed temper QE or will the markets take Ben on?


Collinson FX market Commentary: May 22, 2013
The Ben Bernanke funded equity rally continued to march relentlessly on the back QE Infinity cloud. St Louis Fed's President, James Bullard, signalled that QE will continue to boost growth that has been slower than expected.

The Economic fundamentals are weak and thus Monetary Policy is being used to stimulate the economy. This has become a global phenomena with the ECB and Bank of Japan employing the same tactics. Monetary largesse has now spread to the stronger economies of emerging nations and commodity driven ones, such as Australia and NZ, as they combat 'currency wars'.

The trade exposed nations such as, NZ and Australia, have been hit hard by record currency rises for extended periods and now have resorted to tactics to reverse these inequities. The trend is turning and the advantage the USD, EUR and JPY have had is coming to an end. This will not assist export driven recoveries but the strength of the USD, despite QE, is on the rise. Bond yields have turned and equities are looking overbought. A correction in bubbles seems likely.

The EUR is trading around 1.2900 and the GBP 1.5275 reflecting the dire state of the EC.

Commodities have been on the decline with flagging Asian demand and a stronger Dollar but the recent declines have stabilised with the AUD 0.9825 and the KIWI 0.8175.

The rapid recent declines have been no surprise and long overdue.

NZ Budgetry conditions seem to be on the improve as the Government employs steady Fiscal rectitude unlike the record Budget blowouts across the Tasman. Treasury seems unable to read the progress of the economy with record misreads resulting record budget blow-outs year upon year!

The Labor Government have been quick to spend over estimated revenues resulting in a structural crises which should result in their removal from office due to incompetence. The Fed Minutes will be released tonight along with comments from 'the Ben Bernanke' which should drive equity, commodity and currency markets.



Collinson FX market Commentary: May 21, 2013
Markets took a breather from the boisterous rallies we saw in Equities and the Dollar last week. The 'Big Dollar' took a breather and allowed commodities to rebound along with the currencies.

The AUD moved back to around 0.9800 and the KIWI to 0.8175 supported by the commodity gains and the improved risk scenario. The EUR also regained 1.2900 and the GBP 1.5275 with liquidity flooded markets providing credit and the economic news thin. US equities were flat after the surge from last week with little data out to influence directional pulls.

The markets needs little to trigger further gains in equities as investor search for yield in the frenzied equity bubble. US markets will look closely as economic data releases this week while the political junkies are consumed by the scandals enveloping the Obama administration.

Central banks will be watched closely this week, as will the Housing Sector data out in the US.

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 - Jan 21 - New era begins for US
The weaker reserve, allowed the AUD to move to 0.7550, while the NZD held 0.7150. Trump is President and a new era begins. The new administration has outlined a broad outlook for the new USA and is expected to be highlighted by lower taxes, deregulation and fiscal expansion. The worry has been the trade policy but this will be more a renegotiation of existing trade agreements and more in the way of bi-lateral agreements.
Posted on 20 Jan
Collinson FX Market Commentary - Jan 20 - Markets steady in transition
Markets were steady ahead of the all important US inauguration for Trump tonight. Markets were steady ahead of the all important US inauguration for Trump tonight. The ECB left rates unchanged, in a dovish statement from ECB President Draghi, who observed no upward trend in inflation. By contrast, the Fed President was hawkish, commenting that goals of growth and employment were close to being satisfied, enabling interest rises in the current year.
Posted on 20 Jan
Collinson FX Market Commentary - Jan 19 - UKP surges on Brexit news
The AUD maintained 0.7500, while the NZD drifted back towards 0.7150, shy of the important technical level of 0.7200. UK PM May quelled many critics with her outline of Brexit and provided some plan for the future. Her vision of the return to a global power in trade was appreciated by markets, with the GBP surging to 1.2300, while overnight employment data remained strong.
Posted on 19 Jan
Collinson FX Market Commentary - Jan 18 - Brits opt for Free Trade
AUD trading 0.7540, while the NZD moves towards the important technical level of 0.7200. The Dollar continued to drift, as the GBP surged to 1.2400, while the EUR pushed towards 1.0700. Commodity currencies continued to prosper the slide in the reserve, with the AUD trading 0.7540, while the NZD moves towards the important technical level of 0.7200. The inauguration on Friday is the market focus
Posted on 18 Jan
Collinson FX Market Commentary - Jan 17 - Hard line on Brexit from May
The AUD drifted back to 0.7470, while the NZD held 0.7100, with all currencies being vulnerable to US Dollar swings. The Trump inauguration, on Friday, has also been the major consideration of markets this week. Doubts have surfaced about global trade and predatory industry/corporate tactics driving nervous speculation. The AUD drifted back to 0.7470, while the NZD held 0.7100, with all currencies being vulnerable to US Dollar swings.
Posted on 17 Jan
Collinson FX Market Commentary - Jan 16 - Market jitters over US moves
NZ Consumer Confidence was flat, lending little to a buoyant currency, which held 0.7100. Markets remain in a flux ahead of this week's US Inauguration with high expectations and uncertainties. The Dollar settled, with the EUR trading 1.0640, while the Yen held 114.00. NZ Consumer Confidence was flat, lending little to a buoyant currency, which held 0.7100.
Posted on 16 Jan
Collinson FX Market Commentary - Jan 13 - Trump can't save dollar
The AUD continued to rally strongly, pushing toward 0.7500, while the NZD set to break out targets at above 0.7200 The markets reversal began during the Trump press conference the previous day and continued as analysts digested the repercussions. The 'Trump effect' has been dented as a wider discussion ensues. Trumps promises of lower taxes, fiscal stimulus and deregulation have been roundly welcomed and boosted the equity markets and the Dollar.
Posted on 13 Jan
Collinson FX Market Commentary - Jan 12 - Late reversal for USD
A dramatic reversal in the Dollar has seen the AUD surge to 0.7470, while the NZD broke strongly above 0.7000! The focus remains on the US and the incoming administration. Update in late market trade in the US. A dramatic reversal in the Dollar has seen the AUD surge to 0.7470, while the NZD broke strongly above 0.7000!
Posted on 12 Jan
Collinson FX Market Commentary - Jan 11 - US Confidence surges
The AUD traded up to 0.7350, while the NZD slipped back below 0.7000, impacting the cross rate. Australian Consumer Confidence also surged, pushing to 120.1 from 113.40, which has influenced the local currency. The AUD traded up to 0.7350, while the NZD slipped back below 0.7000, impacting the cross rate. Markets remain focused on the incoming US administration while economic data drives daily direction.
Posted on 11 Jan
Collinson FX Market Commentary - Jan 10 - Australia moves ahead
The AUD reflected this, pushing back to 0.7350, while the NZD regained 0.7000. Australian economic data was positive, with construction rebounding, while Building Approvals jumped. The AUD reflected this, pushing back to 0.7350, while the NZD regained 0.7000. Economic data will drive markets in the lead up to the inauguration of Trump!
Posted on 10 Jan