Collinson FX Market Commentary- January 19, 2013 - Markets surge
by Collinson FX on 19 Jan 2013
Collinson FX market Commentary: January 19, 2013
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Yamaha 1 - 18ft Skiffs, Auckland January 13, 2013 © Richard Gladwell www.photosport.co.nz
Markets surged today flooded with the cheap money the Fed has drowned the market in. The trigger was confidence rising in the housing market. Building Permits rose 6.3% and Housing Starts 12.1%! These are great numbers and in line with many expectations. Caution! These are coming off record lows and is now around 5% of the economy.
Perspective is the key but housing has always signaled a recovery. The US economy is ready to recover but capital remains on the sideline as the 'Greek Style' debt situation will compromise any recovery. Obama has continued to borrow! Memories are short as hyper-inflation remains ancient history and reminders of Greek debt catastrophes have failed to impact. The US is now in the +100%/GDP club and inflation will bring higher interest rates and the demise of the worlds largest economy!
The GBP struggles around 1.6000 and the EUR reflects the weakness of the USD trading 1.3280. Commodities drifted with the AUD 1.0550 and the KIWI just under 0.8400.
Any confidence will be compromised with reality but short term technicals point higher. The market is flooded with cheap money so any fool can pick inflation and thus disaster in the near future!
Collinson FX market Commentary: January 17, 2013
European markets were steady after the IMF released a further tranche of bailout funds to Greece despite some faltering growth prospects. The World Bank has reviewed Global growth forecasts back to 2.4% with emerging markets struggling and Europe in recession.
Draghi had boosted European prospects last week but Germany reviewed their growth prospects lower in line with World Bank forecasts. In the US markets were also steady after the Fed's Biege Book considered a moderate growth in the economy. The Fed was bullish on Consumer Spending but reticent on Jobs growth. Flagging a drag on Companies reliant on European markets and exposed to the Defence Department with huge cuts in the pipeline. Banks continued to prosper funded by the Fed and taking full advantage of cheap money. Goldman Sachs tripled their profits and JP Morgan also beat expectations. Home Builder Sentiment fell, dampening the ever growing sea of bulls in this sector.
The recovery, telegraphed by the Fed, may see a hands-off approach to this year with planning in motion to remove QE in an effort to stabilise inflationary pressures. The EUR held 1.3280 while the GBP slipped under 1.6000.
Improving global demand has supported the high flying commodity currencies with the AUD 1.560 and the KIWI breaking back above 0.8400. Politicians preoccupied with gun control in Washington will soon turn to the 'Debt Ceiling' debate which will drive uncertainty in markets!
Collinson FX market Commentary: January 16, 2013
Markets continued the quiet, non-reactionary trade, experienced since the fiscal cliff was postponed and participants remained unattached. The EUR came back to trade 1.3285 and the GBP 1.6050.
There was little happening on the European front with the German CPI remaining static and the Trade Balance floating along. German GDP was also anemic, rising 0.3%, revealing the Engine-room of the EU has hit a flat spot. In the US, Retail Sales rose 0.5% giving some hope, but the http://www.newyorkfed.org/survey/empire/empiresurvey_overview.html!Empire_State_Manufacturing report showed a big retrenchment in Manufacturing.
Fitch has been the first rating agency to warn the US over the 'Debt Ceiling' debate, which will dominate markets over the next month or so. Commodities continued to hold current high levels, giving support to the AUD at 1.0550 and the KIWI at just under 0.8400.
Look for US political manifestations to drive an insipid market with any surprise economic numbers likely to impact day-to-day moves.
Collinson FX market Commentary: January 15, 2013
Markets were steady to begin the week with little news out on the economic front. US markets were digesting various Fed leaders speeches over the country with Bernanke reiterating his stance on prolonged low rates as long as Unemployment remains stubbornly high and inflation is controlled.
Concerns are surfacing about inflationary pressures and this is any central bankers nightmare and a box Pandora does not want to open! There are open questions over Apple which has now dropped below US$500. The longer their gadgets remain on the market the more profitable they are and we are seeing a shortening lifespan on refreshed products. Post-Jobs may not see the innovation and thus the fallout will grow as innovative companies overtake them.
Commodities remain well bid and the EUR held 1.3350 and the GBP 1.6075 despite Industrial Production falling 0.3%. The AUD traded 1.0550 with Home Loans falling and Job Advertisements dropping 3.8%. Storm clouds seem to be gathering over the Australian economy in an all-important election year.
The KIWI is trading just under 0.8400 but will be impacted by further economic developments in Europe and the US. Plenty of data to determine daily directions this week and look to Political leaders for disruptive messaging.
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