Collinson FX Market Commentary- November 9, 2012 - Equities crash
by Collinson FX on 11 Nov 2012
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Collinson FX market Commentary: November 9, 2012
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Timberwolf on the charge in Friday’s Rum Race © Richard Gladwell www.richardgladwell.com
The end of a tumultuous week in the US with the repercussions being felt globally. Equity markets plunged with the prospect of a gridlocked US Government staring down the barrel of the 'fiscal cliff'! Europe added to the mix with a rioting Greece and a break down of law and order.
The recession has now spread to the EU engine room with Germany suffering the slowdown on global demand. The US has now gone through the crossroads with no real solutions pending and the record deficits driving the national debt over the edge. The US citizenry has now voted for the European style big Government, egalitarion, redistributve socialism that has overwhelmed Europe.
The future is live in the EU and that will kill global growth and demand. This will impact China and thus spread to commodity exporting Australia, NZ, Canada etc. The single currency remains fundamentally flawed and continued bailouts only prolongs the inevitable. The EUR dropped further to 1.2715 and the GBP below 1.5900.
Commodity currencies remain high with the AUD dipping under 1.0400 and the KIWI 0.8150 but as demand contracts globally they will be impacted despite the brittle US Dollar. Markets are in for more uncertainty so economic data will start to realise the Eco-Political decisions made. An extended period of stagnant recession seems likely.
Collinson FX market Commentary: November 7, 2012
Equity markets rallied on US Presidential Election day with the result of a very close election coming in after markets close. A rally in equities is expected with a Romney victory which is not possible according to the mainstream media.
Media sources outside of the US tend to follow the mainstream US media which are notoriously lefty so do not be surprised with a strong showing from the Conservatives! The EUR fell to 1.2815 and the GBP 1.5985 with more trouble emanating from Greece and a possible exit from the single currency. The wave of positive sentiment sweeping markets from a Republican win will extend to the USD as Romney has sworn to sack Bernanke and with it his QE projects that has destroyed the Dollar flooding markets with liquidity.
The RBA left rates unchanged, surprising many pundits, undercover of the 'Great Race'. The Melbourne Cup has truly become international with the who's who of European stayers dominating, resulting in a big win for the Irish. The prospect of winning becomes harder for the locals with the Ozzies concentrating more on sprints and the Europeans revelling in stayers.
The RBA decided global economic conditions had improved enough to support demand and thus relieve the pressure on a rate cut with an eye on growing inflationary pressures. The AUD rallied strongly back to 1.0420 and the KIWI 0.8250.
Collinson FX market Commentary: November 6, 2012
Markets remained quiet in the lead up to the all important US Presidential Elections which will begin to unfold tonight.
The race looks too close to call with a quantum change expected if the Conservatives can get up. The market looks more immediately at the pending 'Fiscal Cliff' which will be resolved by either President but with what combination of Tax rises and cuts (and to what?)! The path of the last four years would not auger well for markets although equities have traveled well being fueled by record monetary expansion by the Central Banks globally.
Romney would at least attempt to address the deficit and commit to fiscal rectitude. Europe has assumed the background but signals of further problems with Greek austerity compliance and continued Bailout remain. The first Tuesday of November is famous also in Australia and not only for the RBA interest rate decision!
The Melbourne Cup will overshadow Political and Financial events for one day which may allow Governor Stevens to slip under the radar.
A rate cut was a virtual certainty until the burgeoning recent inflation data revealed the seeds of growth. This data would have cast a cautionary tone to the RBA and may allow inaction to err on the side of caution. Stevens has moved on every Melbourne Cup occasion and pundits expect him to cut so beware any aversion as this would impact the currency to the upside!
Recent Australian trade data has confirmed a slowdown with a fall in global demand and the impact of the strong AUD so this may tip Stevens uncertainty to act!
External influences on Markets may be reflected in the Cup result with a powerful International challenge lead by the French but we love the Irish so Go Galileo's Choice!
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