Collinson FX market Commentary: March 15, 2014 Click here to find out how to get CollinsonFX's free iPhone app
Equity markets continued to slide impacted by the uncertainty being generated by the crises in the Ukraine. Russian Foreign Minister, Lavrov, met with US Secretary of State, Kerry, with no new developments. The US 'talk the talk' but do not know how to walk it. An ineffectual Foreign Policy from the Obama administration has emboldened many potential adversaries globally.
Putin has seized upon this weakness and decided to rebuild Russian Emperialism in the West. He will allow Crimea to vote for Independence and align with Russia and use this as abject lesson to the revolutionaries currently in charge of the Ukraine. University of Michigan released the Economic Sentiment Index which reflected a lower level of confidence in the US economy. Sentiment fell to 79.9, from 81.6, which will not enthuse the Fed Chairperson.
The FOMC meeting will release their decision this coming week and Yellen will hold a press conference. The tapering process may be deferred and QE Infinity re-constitiuted.This may have be anticipated by markets, as the USD slipped with the EUR hitting 1.3900, and the GBP 1.6625. Commodities drift but domestic economic data has supported a resurgence in the associated currencies.
The AUD held above 0.9000 and the KIWI traded 0.8530. The referendum in the Crimea and the fallout associated, will drive market direction, early in the week. US Housing data and the Fed will have a secondary effect on market directions. Collinson FX market Commentary: March 14, 2014
US Equity markets crashed, following recent falls due to the Geo-Political situation in Europe, and flagging Chinese economy. Chinese data released showed a slippage in Retail Sales and Industrial Production. This has added to the impact on the fall in demand for commodities. Confidence has undermined confidence but had little impact on the resurgent associated currencies.
The KIWI jumped earlier, when the RBNZ raised interest rates, surging towards 0.8550. Wheeler must see some strong inflationary pressures building in the 'rock star economy', to act so early, when major western economies continue a very loose monetary policy. Australian Employment data, revealed a big jump in full-time job growth, thus boosting recent gains in the domestic economy.
The AUD reacted accordingly, breaking back above the important 0.9000 level. The Ukraine crises continues to develop with a referendum for independence in the Crimea. This could provide a turning point in the conflict with expectations high in the Crimea, that they will leave the Ukraine, thus a turning point in the conflict.
This has provided uncertainty inmarkets with equities crashing and currencies volitile. The EUR slipped back to 1.3850 and the GBP 1.6620. This upheaval is likely to continue over the next few days as a resolution is highly improbable. Collinson FX market Commentary: March 13, 2014
Geo-politics continued to dominate markets with commodites under the spotlight. There was little in the way of economic news so Ukrainian developments took precedent. The EUR continued to trade strongly, at 1.3900, although the GBP slipped to 1.6615 reflecting the enthusiasm of the psuedo-Tory Government.
The commodity currencies were under pressure as demand wained. The AUD consolidated under the significant 0.9000 mark and the KIWI traded 0.8450. All eyes remain on developments in the Ukraine with the all important vote in the Crimea. The West desperately fight for Russian retraction and hope that Putin will consider their lame arguments and hollow threats.
The Russian President holds all the cards and has the determination to fulfill their expansionist policy. Expectations remain high and the developments will drive market directions. The RBNZ raised the OCR by .25% to 2.75%. This saw the KWI edge higher towards the .8500 level. RBNZ said a high dollar is not sustainable in the long run, but also said FX intervention is very unlikely. Collinson FX market Commentary: March 12, 2014
Uncertainty remains the central theme globally, with the West trying to come to grips with the stable door, which has been shut for a while and the horse has not only bolted but is in the glue factory! There has been little news on the economic front and Geo-Political issues continue to dominate.
Equity markets are in record breaking territory and the Fed continues to re-evaluate the stated Monetary Policy. The recent economic slowdown has been attributed to the unusually bad winter weather, thus giving an excuse to the Fed, to stall tapering. Yellen will err to the dovish side of policy just as a cat falls on it's feet.
This may re-invigorate the equity rally despite the Geo-Political situation evolving.
Commodities continue to suffer as Chinese demand slips. The AUD broke below 0.9000 and the KIWI held 0.8450, with an early election called, banking on the 'rock-star economy' preserving the status quo. European market continue suffer the uncertainty generated from the Ukraine and a solution is not in the wind. The EUR trades 1.3850 and the GBP 1.6625. Economic data was thrown into the mix of uncertainty to begin the week. Chinese Exports fell 18.1% from a year ago
, which shocked many, as most expected growth and thus demand to continue to strengthen. China and Asia continue to be a major driver of demand and the fall in Chinese demand hit commodity prices hard.
This in turn impacting a soaring AUD. After testing 0.9100 during the local days trade, the commodity driven currency, plunged back towards 0.9000. The KIWI did not have such a roller-coaster ride but did rise then settle back to 0.8450.
Uncertainty undermines markets and the Ukrainian crises has interrupted the bull market in equities. Russia will book the gains in the Crimea and now use a position of strength to influence Kiev, in terms of future political/economic direction, away from the EC. The West is considered an interloper in Russia's sphere of influence and is widely blamed for the current situation in the East.
The Malaysian Airline disappearance has also added to the jitters globally with terrorism suspected.
The EUR retreated back to 1.3870, but remains near highs, although the GBP retreated back to 1.6635. Look for more uncertainty in markets with global geo-political developments unfolding. For more on Collinson FX and market information see:
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