Collinson FX Market Commentary- August 20, 2013 - Momentum continues
by Collinson FX on 20 Aug 2013
Collinson FX market Commentary: August 20, 2013
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Denmark 49er FX - Day 4, Oceanbridge Sail Auckland 2013 © Richard Gladwell www.richardgladwell.com
The momentum of the last week continues with further pressure on equities. US markets were unable to break the inure that has siezed stock markets due to the threat of reduced stimulus. It is hard to believe that markets are so inflated and swamped in liquidity, but here we are!
The Dollar remains relatively strong due to similarly adopted Monetary policy by global counterparts. The ECB has followed the monetary expansionism and this has reduced the impact of the USD which trades 1.3333. The Bank of England has also participated in monetary largesse, due to insurmountable debt and deficit, with growth the only redeemable option. Fiscal rectitiude is the solution and the UK has invested with returns reflected in the GBP, which has moved back to 1.5650.
Bernanke will act to preserve what little historical relevance he may have but it will be too little too late! Greenspan is blamed for the same monetary vandalism that Bernanke will be. They have overplayed their hands due to Governmental incompetence and fiscal ineptitude. The experiment with the left has failed miserably and the people will recognise that emotional social wish lists never avail themselves to reality. Social progress only comes through growth and conservative economic budgeting.
Australia is learning this hard lesson with an exponential growth in debt and an uncontrolled budgetary abuse. Interest on debt has become a major component of Governmental expenditure and the budget has now become structurally broken. It appears the people will right the wrong and this may be reflected in the currency which has recovered to 0.9110 after hitting 0.9200 in yesterdays trade.
The KIWI has improved back to 0.8070, after earlier hitting 0.8100, with economic conditions slowly improving. Commodities dipped due to demand pressure which has been hit by international markets. Look to further growth prospects globally to determine central bank policy and thus equity, commodity and currency markets.
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