Collinson FX Market Commentary- Nov 14 - US Equities unchallenged

by Collinson FX on 15 Nov 2014 Collinson FX market Commentary: November 14, 2014

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Nov 14 - US Equities remained challenged, testing all time records, but failing to make an important step forward. US markets fear the Geopolitical consequences of a war spreading from the Ukraine. Russian troops have piled across the border and look all-in! This dramatic upgrade in tensions has positioned Russia as a state on the move.

The sanctions imposed are suicidal and can only impact the Europeans. The EUR managed a dead cat bounce, moving to 1.2475, while the GBP struggled to 1.5770. Commodity prices were under pressure with the loss in confidence and placed associated currencies under pressure. Despite this, the AUDUSD managed to book gains, holding 0.8770.

The NZD approached 0.7900, supported by interest rate differentials, and local 'rose coloured' dairy prices. The reality of return remains and the carry trade supports an allusion to the RBNZ!

Nov 13 - Equities hovered around all-time record highs overnight, unsure if the Global economy is ready to step up, meanwhile threatened by events developing in the Ukraine. Russian troops are said to have advanced into the Eastern Ukraine supported by tanks and other armoured vehicles. This does little to stoke confidence in Europe already under huge economic pressure.

Russian imposed sanctions on the EU and 'energy threats' to dependent Western states will impact economic growth in a big way. Monetary Policy is in question, with ECB President Draghi assuring QE will continue until the job is done, while Germany has questioned this with demands for fiscal discipline. These conflicts have hit EU prospects with the EUR falling back to 1.2420, while the GBP collapsed below 1.5800, after the Bank of England lowered inflationary expectations and thus growth forecasts.

The US and China arrived at a historical Carbon agreement that seems to be yet another coup for the Obama administrations long list of foreign policy successes. The US doubled its commitment to cut carbon by 2025, while the Chinese have elected to do something about it, after 2030. The effect on the US economy would be immense, but Congressional approval would be doubtful in the extreme, while any attempt to circumvent Congress would be opposed. The AUDUSD tested 0.8700, while the NZD surged back to the mid-high 0.7800s, supported by Fonterra's bullish milk price and interest rate differentials.

Watch the Ukraine closely as the APEC entourage move to Brisbane and the G20. the NZD is pushing 0.6300 against the EUR and has made major gains against the GBP to trade at 0.4965. The NZDJPY cross has soared higher still, trying its luck at 91.00 overnight but currently trades 90.50. This is the highest level seen against the Yen in over a year and significant pressure remains on the upside, but new territory is hard fought and often short lived. Bulls beware.

Collinson FX market Commentary: November 12, 2014

Nov 12 - Equity markets were quiet overnight with the Veterans Day holiday in the US. European markets eked out some gains but markets were very thin due to the US holiday. The USD slipped, while the EUR staggered back to 1.2485, pushing the GBP back above 1.5900.

Commodities rebounded and this allowed the associated currencies to book gains. The AUD is attempting to breach back to 0.8700, with local markets awaiting the much anticipated 'free trade deal' with China, and all the associated benefits. The G20 will take over much of the local attention for the remainder of the week, as Politicians and their hordes of accompanying Journalists, flood the ghost town of Brisbane.

The stage is set for more photo shoots, while protesters use the platform, giving the rest of the city a massive inconvenience! Firmer agricultural prices and the omnipresent interest rate differential boosted the KIWI back towards 0.7800! The NZD currently trades 0.6245 and 0.4900 against the EUR and GBP, with the NZDJPY trying hard to push through 89.00.

Collinson FX market Commentary: November 11, 2014

Nov 11 - US Equity markets continued to test record levels as confidence filters through markets. The resounding victory by the Republicans, has lead to speculation of a more functional Washington, with business friendly policies and lower taxes. The Dollar prospers and the Bull run is being ridden with enthusiasm.

The end of QE Infinity and improving economic conditions, have lead to a sustained rally in the reserve, effecting currencies and commodities. The EUR has slipped back to 1.2425 while the GBP trades 1.5850. APEC is underway in China and trade deals are flying fast and furiously.

The Chinese have secured a massive gas trade deal with Russia, following the recent ground-breaking Oil deal, securing a certain energy future for China and Income flow for Russia. Australia looks to be on the verge a bilateral trade deal which would be a huge boost for the Australian economy.

The AUD recovered from last weeks shellacking, trading 0.8610, while the NZD is holding 0.7740. NZ and Australian markets will look closely at local House Prices today, to inspire domestic markets, while an important RBNZ report may influence the KIWI later in the day.

The NZD trades consistently at 0.6220 and 0.4870 against the EUR and GBP, almost unchanged on yesterday. Likewise the NZDJPY cross is testing 89.00 on the upside but currently trades just below.

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