sail-world.com -- Collinson FX Market Commentary: March 1, 2013 - Boost for currency
Collinson FX Market Commentary: March 1, 2013 - Boost for currency
Fri, 1 Mar 2013
Collinson FX market Commentary: March 1 28, 2013
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The DOW inched towards that all time high of 14,164 after breaking existing resistance levels. It has taken a while since we reached these heady levels and the world has changed considerably. The value of the once mighty Dollar has collapsed ,drowned in liquidity and commodities have skyrocketed as a store of value. Currencies wars have destroyed currency values and citizens wealth, as deleveraging and austerity have been adopted.
The debt, that all but destroyed the global banking system, has been transferred on to the public dime. Deficits remain and debt has spiralled out of control. The problem not only remains but has flourished like a cancerous disease. Europe booked gains after the ECB pledged to continue the loose monetary policy and the EUR stabilised around 1.3075. In the US, GDP grew 0.1% reflecting the stalled economy and contradictory manufacturing reports released overnight. The Chicago PMI increased to 56.8 but the Kansas City Manufacturing Activity reported a contraction of 10 points.
The AUD regained 1.0280 after New Home Sales improved 4.2% but slipped back to 1.0230 overnight with risk assessment weakening. The KIWI traded 0.8265 after some positive Business Confidence boosted the KIWI back over 0.8300 during yesterdays trade.
All eyes are focused on the DOW and the return to pre-GFC highs but economic and political events will overwhelm technical trades.`
Collinson FX market Commentary: February 28, 2013
Equity markets rebounded overnight after some settling results in an Italian Bond auction and some strong news in the US Housing Sector. The Italian Bond auction calmed some frazzled nerves although bond rates are on the rise. 10 year yields rose from 4.17 to 4.85 which is in the wrong direction but was not the spike some expected. In the US, Bernanke appeared in front of the House committee again endorsing his QE policies and reiterating the Fed's ability to exit when necessary. ECB President weighed in supporting their liberal monetary policy.
The certainty of endless liquidity and positive news from the Housing sector pushed the DOW back to that ever strengthening ceiling below 14,050. A break out is necessary to take out the previous high of 14,165. Technically this gets harder the more times this top is tested and fails to break so traders will be nervous. Pending Home Sales rose 4.5% supporting the good news from S&P Case-Shiller supported by the huge flow of relief funds from the Feds after the recent storms. This is highlighted by Weekly Mortgage Applications falling for the third straight week while Housing activity moves north. Durable Goods Orders dropped 5.2% which is a bad sign for manufacturers and reinforces the sentiment of the consumer.
The EUR found support with the news from Europe trading 1.3080 while the GBP remains weak at 1.5125 after GDP contracted a further 0.3%. High risk, high yield currencies felt the effects even greater with the AUD falling below 1.0200 and the KIWI to 0.8225 after some poor Trade data.
The NZ deficit rose more than expected after a surprise fall in exports led by the all important Dairy Industry. Mixed signals are coming from Europe and critical technical levels mean nervous times so investors and traders will be sitting on the sidelines to see which way the penny drops!
Collinson FX market Commentary: February 27, 2013
Bernanke set about righting the ship after the fallout on yesterdays markets from the Italian elections. Bernanke defended his record and endorsed his QE monetary easing policies saying 'benefits outweighed costs'. He outlined his record of an average inflation rate of 2%, as one of the best, but it is hard to have run-away inflation when there is anaemic growth!
Economic reports came in on the right side of the ledger with the S&P Case-Shiller Home Price Index rising 0.9% and New Home Sales jumping 15.6%! Consumer Confidence also mover higher to 69.6 from 58.4, reversing the recent poor stream of economic news. The EUR continued to faulter with the deadlock arising from the Italian elections. The single currency fell to 1.3050 and the GBP 1.5140 after the stalemate election rejected austerity and signalled instability and the road to instability.
The risk aversion spread across commodity currencies with the AUD crashing to 1.0220 and the KIWI down over a cent to 0.8250. The surge in the USD was a safe haven play supported by positive domestic news. Plenty more news to drive markets for the rest of the week with equities attempting to recoup early losses.
Collinson FX market Commentary: February 26, 2013 The DOW looked set to challenge the all time high early but was pegged back by political news from Europe and the fallout from sequestration domestically. Italy's election look set to surprise with the phoenix of Berlusconi rising once again. This is a threat to the austerity policies employed by the current civilian leadership.
The ramifications could be severe with Italian and Spanish bonds being the canary in the mine. Moody's downgraded the UK's cherished 'AAA' status which sent jitters across Europe with the overwhelming debt levels taking its toll. The recession rolls on and looks set to continue for some time as little has been done to address the deficit and debt crises. The EUR reacted accordingly falling back to 1.3090 and the GBP 1.5140.
In the US, sequestration threatens economic growth although this is just another manufactured crises with conception in the Whitehouse. Obama has made an art of crises management, politicizing the problem only to push for favourable outcomes at last minute crises meetings. He is again pushing for higher taxes to expand the socialisation of big Government society.
The Chicago Fed's National Activity Index contracted and the Dallas Fed revealed Manufacturing suffered a further blow. Economic news has been weak contradicting the surge in Equities fueled by the flood of cash courtesy of QE infinity. Political and Economic turmoil looks set to continue in the worlds largest trading zones.
Europe is mired in uncertainty and the US swamped in drama from Obama. Risk aversion hit the AUD falling back to 1.0250 and the KIWI remaining below 0.8400 once again. Technicals continue to issue alerts as equities and currencies fail to break through ever strengthening ceilings.
Collinson FX market Commentary: February 25, 2013
US Equity markets wiped out the weeks losses with a Friday surge sparked by some good economic news from Europe and some pro-QE statements from St Louis Fed Chairman.
In Europe German IFO Business Climate rose to a 3 year high although exports and imports contracted. A German recovery could spark a recovery in Europe but these assumptions ignore the harsh economic realities. In the US, James Bullard suggested QE was here for a 'long time' which reassured many frightened by earlier statements questioning the impact of QE Infinity.
The EUR remained weak at 1.3185 and the GBP 1.5175. The recovery of risk-appetite softened the Dollar against the commodity currencies with the AUD retesting 1.0300 and the KIWI back to 0.8348. A flood of economic data from Europe and the US will drive markets in the coming week.
A good look at GDP growth an Employment with a closer look at US Housing. Can the Bulls ignore economic reality?
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