Collinson FX market Commentary: January 30, 2013
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The bull run continues for 2013 equities emboldened by corporate earnings and an economy awash with cash. Investors desperately search for returns with bonds offering little and equities offering dividend returns and capital gains. The Fed has tripled the balance sheet and flooded the markets with cash thereby encouraging a spike in risk asset investments.
Equities are the major beneficiaries as they approach the pre-crash levels.The ability to print money and expand the Fed's balance sheet has taken the Balance Sheet to unprecedented levels which should scare the hell out of most. The only mitigating factor is that the EU and Japan have quadrupled their own Balance Sheet with gross monitisation of debt.
The Debt mounts to way past tipping levels, which should trigger a debt crises but does not...yet! Any rise in interest rates will trigger default and collapse but why should we worry? The EUR continued to gain, trading 1.3485, although the reality of the real world is starting to impact the GBP at 1.5750. In the US, the Case-Shiller Home Price Index continued to book gains contradicting previous housing data although the Consumer has withdrawn with Confidence falling to 58.6 from 66.7! Commodities find support as currencies are undermined by Central banks with the AUD rising to 1.0465 along with the flood waters.
The KIWI found support at 0.8350 with better than expected trade numbers and reserve currency support. Unrelenting confidence must be questioned with the Deficit/Debt crises around the corner but it is hard to buck the trend with Equity markets surging to post crash high testing unchartered territory. Look to economic data releases for a gauge of economic conditions.
Collinson FX market Commentary: January 29, 2013
Markets opened the new week lower with corporate earnings steady and some weaker housing news. The flat open to the week may just be a break in the rally January has developed. In the US, Pending Home Sales fell 4.3% contradicting the housing bulls and confounding market analysts. The sheer size of the housing surplus and weak demand would prevent any sudden and effective turn-around.
Durable Goods Orders jumped 4.6% which is good news and a positive from the consumer. The EUR continues to trade strongly at 1.3450 after the currency wars continue. The Japanese are intent on boosting their flagging export markets by diluting the Yen causing consternation in Europe and the US. The US and Europe have flooded their own markets in liquidity to gain an export advantage and stimulate growth so have little to complain about.
The currencies greatly effected are the AUD and KIWI who remain hugely disadvantaged and has been reflected in the strength of the currencies. The AUD has come off highs but still trades over 1.0400 after renewed floods in Queensland and NSW will preoccupy markets when they re-open after the Australia Day Holiday.
The KIWI begins the week 0.8315 with poor economic performance not being fully included in currency calculations due to Global Monetary largesse. Markets will continue to be driven by Central Banks and Political/fiscal ineptitude. Economic performance will be gauged by data and expectations cannot be high!?
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by Collinson FX - 8:47 PM Tue 29 Jan 2013 GMT
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