Collinson FX market Commentary: March 12, 2013
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Employment gains in the US have supported the rally in equities and pushed the DOW to ever new record highs. The only challenge now lies in technical target levels with Fibonacci now being examined for possible chart resistance points that traders can focus on as a trigger for the inevitable correction. Asian markets were weaker after Chinese Industrial Production and Retail Sales disappointed analysts expectations.
European markets also were challenged, with the Fitch downgrade of Italy after markets closed Friday. Financials were under pressure as the Political impasse in Italy continues and data confirmed a further contraction in the economy. GDP contracted 0.9% for the quarter which translates to 2.8% annually. This is bad news for one of the EU's leading economic powers and combines with ever deteriorating deficit/debt levels to drive unemployment to levels that threaten social cohesion.
The US brushed off any negatives, with new record highs in equities as economic data supported the equity rally and the US Dollar. The fundamentals are improving at the margin and certainly do not support the growing bubble in equities which is a product of a search for return in a liquidity flooded market. Investors a piling in, anxious not to miss the boat, but traders will be looking for the exit door with the ever growing threat of the inevitable correction.
Kiwi edged higher to .8220 and AUD to 1.0230.
Collinson FX market Commentary: March 11, 2013
The good news kept on coming in the US and equity markets continued to break fresh ground. The all important Non-Farm Payrolls beat expectations and added 236,000 Jobs, well above the 165,000 analysts had envisioned.
Unemployment fell to 7.7% and economic conditions seem to be on the rise. The flows back in to the US was reflected in the strength of the Dollar with the EUR consolidating below 1.3000 and the GBP struggling at 1.4915. Serious economic data releases in the UK and Euope will be a directional focus in the coming week.
The UK is mired in recession and has little in the way of relief. Having the Pound has probably saved them the austerity measures suffered by EURO participants and allowed currency advantages to boost trade. Fitch downgraded Italy to BBB after markets closed on Friday so we can expect a soft open to the new week with jitters filtering around the single currency zone.
The US goes from strength to strength with the Bulls in charge as the limitless sea of liquidity floods equity markets.
The flow back to the USD has left the AUD vulnerable trading under 1.0200 and the KIWI has slipped back to under 0.8200. With confidence on the rise the RBNZ is unlikely to move rates this week. US economic fundamentals may be the only brake on the rampant investors piling in to Share Markets!
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by Collinson FX - 11:21 PM Mon 11 Mar 2013 GMT
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