Please select your home edition
Edition
Collinson and Co

Collinson FX Market Commentary- November 22, 2012 - Lift in Equities

by Collinson FX on 22 Nov 2012
Image of the Day Draycote Dash - GBR mixed fleet sailing Malcolm Lewin http://www.malcolmlewinphotography.co.u

Collinson FX market Commentary: November 22, 2012

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

A ceasefire has been proclaimed in the Middle-East but this may be in deferment to the US with the arrival of Secretary Clinton.

The break in hostilities will be no more than a tentative arrangement while Hamas restore their missile capability and the Israelis look to a more permanent solution. Unfortunately the cowardly terrorists advancing the war will not be satisfied until the Jewish state is destroyed so no solution can be proclaimed.

This did boost equity markets despite the EU crises being reinvigorated. EU FInance Ministers failed to reach agreement on the Greek bailout after the IMF called upon the Germans to fund further bailouts and existing loans turn toxic. The crises continues to spiral out of control and quarterisation may now be too late. Greece should have been cut and now becomes a millstone around the viability of the EC. German Chancellor Merkel advocated the EFSF as the funding mechanism but pockets are deep with arms on the short side.

In the US, the Fiscal Cliff issue remained stalled with the absence of the President to drive the negotiations. Consumer Sentiment dipped but the Manufacturing PMI rose to 52.4 from 51.3.

The EUR regained 1.2800 but this will be tenuous at best. Risk aversion remains and demand driven commodity prices undermine the strength of the AUD which slipped to 1.0350 and the KIWI down to 0.8125. Fragility of the middle east is reflected in US and European markets which remain highly vulnerable


Collinson FX market Commentary: November 21, 2012

The big news economically was Moody's downgrade of France. This has been telegraphed but does have an impact as France is a leading nation within the EC and is relied upon as a foundation and support for lesser nations.

President Hollande has a tax and spend economic philosophy so this will further test ratings levels as indebtedness grows and the economy deteriorates. The EUR trades just below 1.2800 and the GBP 1.5900 and developments in the US could drive future direction. Bernanke spoke with a somewhat upbeat view on the US economy. He noted the improvement in Housing and Consumer Expenditure and Sentiment. He predicted a 'good year' for 2013 if Congress and the President get their act together. His prognosis of the Fiscal Cliff was recession and one which the Fed could not combat.

He endorsed QE Infinity but did not advocate further Monetary easing. The upbeat Bernanke has left one big 'if'! There will be a deal to avoid the Fiscal Cliff but the worst case scenario may well be accomplished. Some taxes may not rise but there will certainly be tax rises and expenditure cuts will be tempered to avoid popular entitlement cuts.

The root of the deficit and debt is entitlements and Democratic spending which will not be addressed.

Debt now has gone beyond 100% of GDP which was the crises point assumed in Europe. The news is not great but the spotlight has been removed with the President touring Asia and Thanksgiving providing the relief of a long holiday weekend. Negotiations will resume in earnest next week and that will be a testing time for equity markets.

Commodities drifted and took the AUD back to 1.0365 and the KIWI down to 0.8150.


Collinson FX market Commentary: November 20, 2012

US markets rallied strongly in to the new week after finishing strongly on the close Friday. The market uptick eliminated much of last weeks losses after the President expressed confidence over negotiations with congress regarding the Fiscal Cliff.

European Finance Ministers agreed to release the next bail-out tranche for Greece with the proviso they fulfil their obligations under the austerity agreement. Risk appetite soared with the EUR regaining 1.2800 and the GBP 1.5900. Greece will not comply so they will continue to support the failed member nation to ensure the single currency does not collapse. Deferment is preferable to destruction! In the US, Housing data supported the positive sentiment with Existing Home Sales rising 2.1% and the NAHB Housing Market Index moving up to 46, both beating expectations.

The positive spin from Washington was more the absence of the President, that enabled the markets to rally in the lead up to the Thanksgiving long weekend. Obama tours Asia and thus deflecting from the fiscal negotiations allowing a rally to ensue. The Middle-East crises continues to evolve and has the potential to spin out of control. The threats to markets are considerable and diverse, from the EU debt crises to the Fiscal Cliff in the US but a trigger could be the Israel conflict spiralling out of control across a destabilised Middle East.

Commodities rallied as economic confidence rose with the AUD breaking above 1.0400 again and the KIWI approaching 0.8200.

This tinder box, globally, is highly volatile so markets will remain very nervous.

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 - Oct 20 - KIWI plunges on Govt change
Markets immediately reacted with the KIWI plunging towards 0.7000 NZ finally got a new Government, with the NZ First Party joining with the Labour/Greens, forming the super Rainbow coalition. Markets immediately reacted with the KIWI plunging towards 0.7000! NZ First got four Cabinet posts and the Deputy PM role.
Posted on 19 Oct
Collinson FX Market Commentary - Oct 19 - Dow surges again
The AUD trades below 0.7850, while the NZD drifts back towards 0.7100, unsettled by the lack of Government. The AUD trades below 0.7850, while the NZD drifts back towards 0.7100, unsettled by the lack of Government. No Government has yet to be determined, as the soap opera surrounding the formation of Government continues, creating uncertainty which is kryptonite to markets.
Posted on 18 Oct
Collinson FX Market Commentary - Oct 18 - Dow hits new high
The RBA named threats which allowed the currency to soften and trade 0.7830 NZ CPI numbers boosted the NZD back to 0.7200, but the RBNZ ruined that scenario citing static inflationary pressures, prompting the NZD to fall back to 0.7150. The RBA released their minutes, which observed tightening monetary policies in many developed countries, but confirmed 'rates would remain low for some time'!
Posted on 18 Oct
Collinson FX Market Commentary - Oct 17 - Quiet uncertainty
AUD drifted back to 0.7850, while the NZD slipped to 0.7160 A quiet start to the week, with little economic data being released globally, although many Geo-Political events threaten. China CPI drifted lower, to 1.6%, hitting growth prospects and commodity demand. This translated directly in to the associated currencies, with the AUD drifting back to 0.7850, while the NZD slipped to 0.7160.
Posted on 17 Oct
Collinson FX Market Commentary - Oct 14 - Market procrastination
Commodity currencies found some legs, with the AUD pushing through 0.7800, while the NZD managed to regain 0.7100. Political games continue on the NZ political front, with kingmaker Winston Peters, deferring any decision on the new Government another week. Peters is loving his time in the Sun, but uncertainty is not a welcome ingredient to market confidence, while both the public and business tire of his procrastination.
Posted on 13 Oct
Collinson FX Market Commentary - Oct 5 - Brexit pressures on UK
The NZD fell back below 0.7150, uncertainty dominating the local market, while the Dairy Auction sales were also weak. The RBA left rates unchanged, at 1.5%, a 14 month trend with no near-term prospect of a change. This initially hit the vulnerable AUD, falling below 0.7800, but recovered in overnight trade. The KIWI has been the underachiever, on the global stage
Posted on 5 Oct
Collinson FX Market Commentary - Oct 03 - Markets shocked by shooting
The AUD drifted to 0.7820, while the NZD tested 0.7200, on the downside. Equity markets were surging to record levels to begin another quarter of the 'Trump effect'. The massive rally in confidence is underwritten by executive actions but requires urgent legislative tax reform. The ISM Manufacturing number came in better than expected, outperforming the PMI data from Europe, which was reflected in the Dollar.
Posted on 3 Oct
Collinson FX Market Commentary - Sep 30 - NZD undermined by election
The NZD trades around 0.7200, undermined by post-election negotiations, while the AUD drifted to 0.7830. The NZD trades around 0.7200, undermined by post-election negotiations, while the AUD drifted to 0.7830. The RBA rate decision, in the coming week, will provide a summary of economic conditions in the local economy and their place in the world.
Posted on 1 Oct
Collinson FX Market Commentary - Sep 28 - Uncertainty reigns supreme
AUD drifted to 0.7880, while the NZD tests 0.7200, on the downside. NZ political uncertainty will undermine confidence, The KIWI looks to hold 0.7200, but uncertainty reigns supreme, as negotiations for a Government fail to commence. The MMP system has resulted in this uncertainty, many times and was only overwhelmed by the previous popularity of former PM, Key. Speculation remains the most popular sport in Aotearoa unsettling markets.
Posted on 27 Sep
Collinson FX Market Commentary - Sep 26 - Geopolitics hit currency
The NZD fell back to 0.7250, while the AUD drifted, to trade 0.7940. The EUR fell back to 1.1850, driven by the German election results, while the GBP drifted to 1.3460. The NZ election remains up in the air, with extended post-election negotiations expected, driving uncertainty in the local currency. The NZD fell back to 0.7250, while the AUD drifted, to trade 0.7940.
Posted on 26 Sep