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Collinson FX Market Commentary- October 30, 2013 - ANZAC drift

by Collinson FX on 31 Oct 2013
Giacomo (Jim Delegat) - Start of Coastal Classic 2013, Waitemata Harbour, October 25, 2013 © Richard Gladwell www.photosport.co.nz

Collinson FX market Commentary: October 30, 2013

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The days of economic fundamentals driving the markets are long gone, now the Fed has introduced their new economic regime of Monetary Expansionism. The unprecedented period of duplicity by the Fed has created a new monetary utopia and damn the consequences! This is the new reality....'good news is good news and bad news is good news!'.

The Fed meets today with the outcome announced tonight, with the likely full extension of QE infinity with the possibility of an expansion. The equity bubble has continued to stretch, with no prospect of a let up in the flood of liquidity. The only threat is a reality prick which may cause panic in equity, currency and commodity markets. The trigger for this will be reflected in the Bond market so any spike in US 10 year bonds will be the canary in the mine.

Equities again surged with the news that Consumer Confidence fell by the most in 2 years and Retail Sales contracting 0.1%!? S&P Home Prices rose 0.93% to 12.83%, some good news to a faltering economy.

The Dollar rebounded, with the EUR slipping to 1.3750 and the GBP 1.6030. Risk currencies reflected some of nervous reality, with the AUD dropping to 0.945 and the KIWI drifting to 0.8250. All eyes remain on the Fed's announcement tonight.


Collinson FX market Commentary: October 29, 2013

The Fed meets for two days tonight and the outcome will be keenly awaited with Central Bank stimulus the main driver of equity bubbles.

Some have suggested that the weak economic data may prevent the introduction of Fed tapering but now a few are suggested enhanced monetary stimulus!

The 'all in' monetary policy would also be attractive to the doves of which nominee, Yellen, is certainly one. US Industrial and Manufacturing Production was mixed and the Dallas Fed Activity reported a decline in activity. Exisiting Home Sales also declined, by a further 5.6%,providing further evidence of a softness in the housing market despite record low interest rates.

The Dollar stabilised momentarily, with the EUR trading below 1.3800 and the GBP 1.6150. Risk currencies were steady with the AUD 0.9550 and the KIWI trading just below 0.8300. All eyes will be on the Fed and other Central bank activity, including the mighty RBNZ, which may offer a surprise!


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