Please select your home edition
Edition
Collinson and Co

Collinson FX Market Commentary- September 20, 2012 - Japan buys bonds

by Collinson FX on 20 Sep 2012
Image of the Day Koster 360 - 2012 PWA Cold Hawaii World Cup © John Carter / PWA http://www.pwaworldtour.com

Collinson FX market Commentary: September 20 2012

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

The Bank of Japan surprised the markets with an expansion of the bond buying program in an attempt to stimulate the economy and counter QE3.

The expansion of Bond buying increases liquidity and attempts to protect the JPY and the export markets. This confounds common sense as to why the RBA and RBNZ continue to maintain the differential in interest rates and domestic liquidity. The result is to support higher rates and currencies killing trade exposed industries such as exporters and tourism.

The AUD approached 1.0500 again despite testing local conditions and the KIWI remains strong, testing 0.8300. Equity markets remain strong with risk appetite buoyant from the monetary supply. In the US, the housing market received some positive news in the form of existing home sales. They rose 7.8% and Housing starts also gained 2.3%.

The prospect of a bottom in this market is possible although building permits declined 1% and weekly mortgage applications fell despite growing refinancing demand.

The EUR held 1.3050 and the GBP trades strongly at 1.6225 with no major eco-political events driving financial markets.

Local NZ markets will look at the state of the economy today with NZ GDP to be released. Central Banks seem to be the only game in town with Political leaders reticent to act fiscally as they were elected to do!


Collinson FX market Commentary: September 19 2012

Market fears rose with doubts over the European debt recovery program and its ability to solve the crises. The Spanish have indicated that they will consider a bailout if conditions are acceptable.

The EUR slipped back to trade 1.3035 with the new rising headwinds. The GBP continued to gather strength to 1.6250 insulated from the single currency woes. The important ZEW Economic Sentiment report showed Germany improving but from a record low base and still remains negative.

In the US, markets traded sideways with many expecting this holding pattern until the November elections. The NAHB House Market Index rose to 6 year highs to 40 from 37. The housing market has rallied with equities after Bernankes infusion of further liquidity to the market.

The state of equites is trading at 2007 levels with risk appetite strong although these levels are scary and you must be brave to be long. Economic data will be the driver although political events will gather in impact the closer to the Presidential elections.

Europe will remain a great determinant and this will be driven by the success of the Bailouts!

Commodities drifted from highs pulling the AUD back to 1.0440 although the KIWI remains bid on 0.8260.


Collinson FX market Commentary: September 18 2012

The fallout from QE3 remains with the equity markets showing risk appetite.

The positive news from the equity markets are not reflected in our quantum which we call reality. The deficits remain crippling and debt levels have reached tipping point, so why have the markets decided to invest in equities. Bernanke has decided that corrupted Keynesian economics will keep his job as he pins his hopes on the biggest spending President of all time!

The world needs a quantum shift and address the welfare/beneficiary system robbing productive society to support largesse.

The EUR moved to 1.3100 after all the Central Bank corruption of the Dollar and the GBP moved to 1.6250. Commodities have found support with the reserve currency demise although the AUD struggles at 1.0465.

Questions must be asked as to the relative weakness despite the concerted effort to undermine the reserve currency.

The KIWI trades 0.8250 and shows some support though fundamentals point to a terrible readjustment.

Re-election of the Obama democratic regime could spell the end of western capitalism and with it the hopes of future generations!



Collinson FX market Commentary: September 17 2012

Equities continued to rally on the back of Bernanke's nuclear option. The release of the new QE3 allowing the Fed to buy $40 Billion/month for eternity has sent equity markets into a buying frenzy crashing through technical tops.

The overhwelming response is natural considering the promise of an endless supply of cheap money. The rally continued with some positive data assisting markets. University of Michigan Consumer Sentiment rose as did Retail Sales endorcing the rise in risk sentiment. Egan-Jones downgraded the US from AA to AA- but this failed to raise any fears. Manufacturing and Industrial Production in the US both slipped confirming the state of the US economy and exemplifying the reason for central bank interference.

The USD has been understandably trashed as the Fed washes away the value of the once mighty Dollar. The EUR rallied to 1.3115 and the GBP 1.6215. Rumours abound that a pending EU$300 Billion bailout of Spain is being considered by the Troika. The EC,ECB and the IMF would not discourage the bailout considering the contingency mechanisms they now have in place.

Commodities rallied as the USD faultered boosting the AUD to 1.0540 and the NZD to 0.8275. This week will closely monitor activity in the Eurozone with US economic data featuring Housing and Manufacturing.


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 - July 22 - RBNZ's words undermine NZD
The AUD slipped below 0.7500, while the NZD surrendered the huge number of 0.7000 The AUD slipped below 0.7500, while the NZD surrendered the huge number of 0.7000, undermined by the RBNZ statement telegraphing further interest rate cuts.
Posted on 22 Jul
Collinson FX Market Commentary - July 21 - It's official, No slowdown
The AUD remains below 0.7500, while the NZD battles to hold the very big number of 0.7000 Oil fell to $45/barrel, leading a raft of commodities lower, putting a ceiling on associated currencies. The AUD remains below 0.7500, while the NZD battles to hold the very big number of 0.7000. Central Bank intentions in Australia and NZ are clear, with NZ LVR's, clearing the decks in preparation for rate cuts.
Posted on 22 Jul
Collinson FX Market Commentary - July 20 - Markets make full recovery
The AUD trades below 0.7500, while the NZD is headed towards 0.7000 RBA minutes provided a great summary of global economic conditions and how they impact the Australian situation. The RBA considered the impact of the Brexit and recognised that markets were back to pre-brexit levels, except the GBP
Posted on 20 Jul
Collinson FX Market Commentary - 19 July - Brexit a boon for Brits?
NZ CPI came in at 0.4%, for Q2, missing expectations. This pushed the currency below 0.7100 The tumultuous weekend of terrorism in France and a failed coup in Turkey failed to unsettle markets. Equities and currencies commenced the week quietly with the USD settling and share markets perched just below highs. QE has provided massive amounts of cheap money to supply equity markets
Posted on 19 Jul
Collinson FX Market Commentary - July 16/17 - French attack hits USD
The NZD was undermined by the RBNZ commentary, which enhanced the effect of a rising reserve The NZD was undermined by the RBNZ commentary, which enhanced the effect of a rising reserve, with the KIWI drifting back towards 0.7100. Geo-Political events are overwhelming economic events, while Central Bank intervention has driven market moves, filling the space of vacuous global fiscal policies.
Posted on 18 Jul
Collinson FX Market Commentary - July 15 - RBNZ's surprise adjustment
The RBNZ surprised many, with an adjustment between cycles The RBNZ surprised many, with an adjustment between cycles, allowing commentary to drive the currency back below 0.7200. The RBNZ never seem to quite get it right in the Monetary Policy realm and this interruption is a correction of the last, ham-fisted, statement
Posted on 14 Jul
Collinson FX Market Commentary - July 13 - Pound surges on confidence
The uncertainty is dissipating and markets are reacting accordingly The GBP surged, with new confidence, pushing to 1.3250. The Japanese PM, Abe, ordered further stimulus from the Bank of Japan and the Yen jumped to 104.75. The Australian Liberals met in Canberra and are awaiting a new cabinet selected by PM, Turnbull. The uncertainty is dissipating and markets are reacting accordingly
Posted on 13 Jul
Collinson FX Market Commentary - July 12 - Commodities and Oil drop
Commodities drifted lower, with Oil falling below $45/barrel, pushing the associated currencies back. Commodities drifted lower, with Oil falling below $45/barrel, pushing the associated currencies back. The AUD traded 0.7525, while the NZD attempts to hold 0.7200. Markets are calm but expect further Central Bank influence over a relatively quiet economic data release week.
Posted on 13 Jul
Collinson FX Market Commentary - July 9 - RBNZ's dance macabre
The NZD continued to surge, testing 0.7300, following the 'dance macabre' of the RBNZ Chinese data is also due for release but no surprises are expected, as usual! The NZD continued to surge, testing 0.7300, following the 'dance macabre' of the RBNZ. The AUD traded up to 0.7575, while the USD was steady, with the EUR 1.1050 and the GBP 1.2950. The Bank of Japan's inaction, with the JPY trading 100.50, will no doubt be rectified in the short term!
Posted on 12 Jul
Collinson FX Market Commentary - July 8 - RBNZ inaction lifts KIWI
RBNZ promised more restrictions on housing while warning any further rate cuts 'could pose financial stability risk'! The RBNZ promised further restrictions on housing while warning any further rate cuts 'could pose financial stability risk'! The green light saw the KIWI rally against most currencies. The AUD retreated, falling to 0.7460, after S&P lowers the outlook from stable to negative.
Posted on 8 Jul