Please select your home edition
Edition
Collinson and Co

Collinson FX Market Commentary- May 24, 2013 - AUD and NZD steady

by Collinson FX on 24 May 2013
Stratocaster - 2013 Auckland Cup, Day 2 © Richard Gladwell www.photosport.co.nz

Collinson FX market Commentary: May 24, 2013

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

US equities retreated overnight, giving up the previous days gains on some weaker than expected economic data. The ADP Jobs report signaled an increase of 158,000 private sector jobs were created last month, below expectations. This is a pre-cursor to Friday's all-important Non-Farm Payrolls expected to show an increase around 200,000!

The Institute for Supply Management also drifted lower to 54.4 from 56 reflecting weaker economic conditions in the Non-Manufacturing sector. This came on the back of growing Eco-Political pressures in Europe and Asia. European markets remain under the spotlight with fallout from Cyprus still to be measured and continued political instability in Italy.

The EUR trades 1.2840 and the GBP 1.5150 with many nervous investors. Growing Political instability in Asian is also impacting markets with North Korea beating the drums of war but is it 'crying wolf?'

The AUD was steady after some solid Trade Data reflecting improving conditions, with the currency holding around 1.0450.

New Home Sales fell 5.3% and Political Instability has become the norm holding back any concerted recovery. The KIWI continues to trade above the 0.8400 level and will reflect risk events offshore.


Collinson FX market Commentary: May 23, 2013

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 - Sept 27 - Oil Production cuts?
The NZD was under pressure, with speculation of RBNZ cuts, adding to worrying trade data. The NZD was under pressure, with speculation of RBNZ cuts, adding to worrying trade data. The trade deficit widened, with a rise in Imports and a fall in Exports, spurred by the overvalued KIWI. The NZD fell to the low 0.72's, but regained some ground overnight, to trade above 0.7250.
Posted today at 3:57 pm
Collinson FX Market Commentary - Sept 25 - The price of Brexit
NZD fell to 0.7230, while the AUD drifted back towards 0.7600 European economic data was benign, as expected, with Manufacturing/Services/Composite PMI data flat. French GDP contracted and promises of a future, without Britain, is not bright. The EU has brought in many members, over the years, but most are net 'takers'.
Posted on 26 Sep
Collinson FX Market Commentary - Sept 23 - USD continues to sag
NZD clings on to 0.7300. The AUD has pushed above 0.7650, but drifted in late trading, despite a weakening Dollar. The ECB and RBNZ continued the inaction of the Fed and the Bank of Japan. The RBNZ has left rates unchanged and seemed content with local economic conditions. The Jaw-boning of the currency continued, but to no avail, as the currency holds around 0.7300.
Posted on 24 Sep
Collinson FX Market Commentary - Sept 22 - Bank flicks policy
Commodity currencies moved higher, with the AUD testing 0.7600, while the KIWI consolidates above 0.7300. Markets were dominated by the Fed and the Bank of Japan overnight. The BoJ was the first cab off the rank, announcing a complete upheaval of the Banks Central Bank monetary policy. The attempt is to control asset growth and interest rates through monetary manipulation.
Posted on 22 Sep
Collinson FX Market Commentary - Sept 21 - Dairy Auction stunts KIWI
The New Zealand Dairy Auction revealed a halt in recent rises, stunting the currency The Dollar remained steady, with the EUR trading 1.1150, while the GBP slipped below 1.3000. The New Zealand Dairy Auction revealed a halt in recent rises, stunting the currency, with the KIWI attempting to hold 0.7300. Australian consumer confidence was steady, which was reflected in the currency, which traded around 0.7550. All eyes remain on the Fed and the Bank of Japan!
Posted on 21 Sep
Collinson FX Market Commentary - Sept 20 - Bloomberg bats for KIWI
Bloomberg has come in to bat for the KIWI, offering justification for the relative currency strength Bloomberg has come in to bat for the KIWI, offering justification for the relative currency strength, citing the 3.6% GDP number. This will undermine any argument the RBNZ has to cut further, but look at comparable interest rates?? The NZD trades around 0.7300, while the AUD holds around 0.7550, fighting a rising reserve.
Posted on 20 Sep
Collinson FX Market Commentary - Sept 18 - RBNZ decision factored in?
The AUD fell below 0.7500, while the NZD dropped to 0.7250, perhaps anticipating the coming RBNZ rate decision!? The Pounds momentum seems to be in reverse, with the Dollar aiding to the dovish Bank of England monetary policy. The coming week will not be a huge one for economic data releases, so expect further speculation, with regards Central Bank activity. The AUD fell below 0.7500, while the NZD dropped to 0.7250, perhaps anticipating the coming RBNZ rate decision!?
Posted on 19 Sep
Collinson FX Market Commentary - Sept 16 - US shrinks while NZ grows
The NZD also rallied back to 0.7300, boosted by the reserve and better than expected GDP growth The NZD also rallied back to 0.7300, boosted by the reserve and better than expected GDP growth, while Manufacturing PMI was steady. Data just confirms speculation on Central Bank moves and markets will focus on the Fed and Bank of Japan announcements next week!
Posted on 16 Sep
Collinson FX Market Commentary - Sept 14 - Opportunity for new theory
The NZD fell more than a big figure, back to 0.7230, while the AUD languished at 0.7450. Oil jumped back to $47/barrel, but the spike was not a boost for commodities in general, more a reaction to supply issues. The NZD fell more than a big figure, back to 0.7230, while the AUD languished at 0.7450. Economic fundamentals are obviously weak, precluding any return to normal monetary policy, allowing the academics to invent new economic theory?!
Posted on 14 Sep
Collinson FX Market Commentary - Sept 10/11 - Presidents create chaos
AUD slips to 0.7540, while the NZD is now testing 0.7300 on the downside The prospect of a rate rise spurred the Dollar against the commodity currencies, with the AUD slipping to 0.7540, while the NZD is now testing 0.7300 on the downside. The coming week is light on economic data release, although Central Bank influence will remain, driving currencies and equities.
Posted on 12 Sep