Collinson FX market Commentary: January 25, 2013
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The problems arising in the economy have not been sufficient to impact markets with 2013 rallies continuing. There is little to disappoint or impact equities so the rally continues unabated. Politicians in Washington seem to have achieved a concensus and clouded economic warning signals.
The EUR moved higher to 1.3375 and the GBP below 1.5800 boosted by the lack of negative news and the sea of cash the Fed have decided to flood the market with! All the confidence markets have exhibited have been a false dawn. The lack of bad news and stop-gap political measures have created a 'Michael Jackson' bubble and rallies continue. Prospects remain questionable and reality will hit home through data releases.
Commodities drifted and this is probably a reflection of some reality as gains have been on a monetary basis with $ having to find a home!
The AUD drifted to 1.0460 and the KIWI below 0.8400. The NZD/AUD cross has made a quantum move back to test 0.8000 and any consolidation means a new trading range. Fundamentals drive markets but all technicals point to new ground so be very aware of new trading ranges!
Collinson FX market Commentary: January 24, 2013
Equity markets consolidated the gains for January with little to interrupt the bull run of 5% in 2013. The fears over the Debt Ceiling debate have dissipated as Reuplicans look to give a free pass without condition, save the demand to fulfill Budgetary obligations. House Prices inched up by 0.6% and weekly mortgage applications rose by 7%. Markets look steady without any imminent threats from Washington although this will come as the debt/deficit crises cannot be ignored.
The EUR slipped back to test 1.3300 and the GBP rose to 1.5840 after British PM Cameron, made his much telegraphed speech regarding the EU and UK membership. Cameron has outlined the growing legislative overreach from Europe and the need to more democratic controls over European lawmakers. He has proposed a referendum on membership and this would put a cat amongst European pigeons. The move to closer fiscal and political union is scaring many nationalists and may threaten Europe.
The discussion is underway and is now public and likely to be a major driver over the next couple of years. Commodities continued to benefit the confidence flooding markets awash with liquidity and boost associated currencies.
The AUD dropped earlier after CPI numbers fell to 0.2% giving an annualised 2.2%. This was heralded as a positive by the discredited Treasurer but the reality is that is a reflection of the weakness in the economy. Citizens know the reality of rising costs but are not reflected in inflationary data because of the compilation of said data and drags on Housing etc.
The AUD bounced back with the rise in markets to trade 1.0550 and the KIWI 0.8425. Economic data and Political developments will drive day to day moves.
Collinson FX market Commentary: January 23, 2013
Equities continued to gain, supported by the flood of liquidity kindly provided by the Federal Reserve. Exisiting US Home sales fell 1% after a deluge of positive sentiment in the housing sector which may undermine the much vaunted recovery. The consumer is under pressure with unemployment remaining high and little prospect of relief from a resurgence in Capital investment. The Obama inauguration party is over and reality will now hit home.
He outlined a liberal agenda with priorities being Green Energy, Gay rights and Immigration. That should be great for the economy and address the deficit blow outs and the crippling debt. Cool subjects that the air headed social democrats and minority groups rate highly will do little to address the economic fundamentals and will spell disaster for the US. Progressive liberals seem intent on driving the worlds largest economy down the socialist road of a failed Europe.
The EUR tested 1.3300 on the downside and the GBP 1.5850 with the ZEW Economic Sentiment indicator rising but very little positive news emanating from the failed economic experiment. Commodities remained well supported due to steady Asian demand and continued weakness in the reserve currency.
These combined to support the AUD at 1.0550 and the KIWI back towards 0.8400. The strong performance of these currencies are a reflection of the weakness of the USD and EUR rather than a positive domestic economic stories. The US is going to be under severe pressure and the much vaunted housing recovery looks to be questioned with Existing Home Sales falling.
Priorities remain social issues from Obama in a time where the US faces fundamental economic questions. The Tories seem unable to offer solutions and the confrontational nature of US politics looks set to continue, which will not solve the critical questions being asked.
Collinson FX market Commentary: January 22, 2013
Markets were quiet to open the week with the US closed for MLK Jr Holiday and celebrating the inauguration of the second term Obama. There will be a lot of ostentatious grandeur across our screens so be prepared for meaningless platitudes and oration. The amazing platform outlined by Obama was his direction of climate change and green energy without a mention of the Debt or Deficit!
Astounding the priorities of this regime and dangerous which indicates a propensity for increased spending, borrowing and taxing. This fundamental liberal, progressive agenda has failed in the past and will fail again with apocalyptic consequences.
European markets rallied, boosted by the positive news regarding the 'Debt Ceiling' negotiations in Washington. The IMF has warned of growing holes in the Greek budget including the bailout, meanwhile Merkel lost a major election in Lower Saxony hinting at a resurgence of the left.
The EUR has held its ground trading 1.3315 although the GBP continues to slip moving down to test 1.5800. Commodities were still well bid which maintained support for the AUD at 1.0500.
The KIWI was steady at 0.8350 after the shock inflation data last week, hinting at weaker than expected recovery. All eyes will turn to the US markets when they open tonight!
Collinson FX market Commentary: January 21, 2013
Equities closed the week flat again after some good news from the GOP in the House of Representatives. The House proposed the extension of the Debt Ceiling until April 15th with a budgetry requirement from the Senate and the House.
This has supported the high levels attained from gains so far this year. News from China was positive with GDP growth moving up to 7.9% for the year. This has leant support to the associated commodities and currencies.
The AUD held 1.0500 athough the KIWI dipped to 0.8350 after an unexpected contraction in the CPI reflecting the parlous state of the economy. European markets were hardly filled with confidence after UK PM Cameron voiced concerns over the future of the EU and British participation.
The University of Michigan Consumer Confidence fell to 71.3 from 72.9, dissappointing many market participants. The coming week will continue to look at Earnings and Economic data but will not see much action until Tuesday due to MLK Junior holiday in the US!
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by Collinson FX - 4:20 AM Fri 25 Jan 2013 GMT
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