Collinson FX market Commentary: July 3, 2013
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Equity markets were travelling well through Asian and European markets, although chatter surrounding Portugal and rumours regarding Greece, swept across markets to dampen enthusiasm. Equities in the US plunged into the red, after Fed member Dudley appeared to confirm tapering, albeit with a different data matrix. This also gave new legs to the Dollar, with the EUR down below 1.3000 and the GBP 1.5150. Energy prices were on the rise, but from Middle East upheaval, rather than demand.
Commodities retraced and bonds settled with US Factory Orders steady but economic optimism falling. Central Bank influence continues to remain primary and overrules data. The all important job numbers are expected to deliver 165,000 new jobs by Friday but this may be interpreted as a green light for QE tapering, thus cause an equity slump. Hard to pick with the markets so corrupted by Central banks!
The RBA left rates unchanged due to the recent 12 cent fall in the AUD, which has reset the economy, achieving what the RBA has been attempting to do with recent cuts. The AUD was lower as the dovish bias continues and this was exaggerated by the rise in the USD.
The AUD traded just over 0.9100 and the KIWI dropped back towards 0.7700 looking vulnerable on taper talk. Central Banks continue to dominate market direction and this will continue with the ECB and B of E announcing Thursday but Jobs will have impact one way or the other!
Collinson FX market Commentary: July 2, 2013
US equity markets continued to rally after positive economic data embraced the economy. The important ISM Manufacturing report broached the significant 50 level, rising from 49 to 50.9, and Construction spending also rose, boding well for the US economy. Bond yields settled as economic data had a positive impact with the Fed taking a back seat. Earlier mixed news from Asia, with the Chinese Manufacturing PMI drifting lower, although the important Japanese Tankan report revealed big improvements in large Manufacturing. European PMI was mixed with rises in Italy and France but a fall in Germany. Unemployment pinched higher from 12.0% to 12.1%.
The Dollar was steady against the single currency holding above 1.3050 and the GBP 1.5215. US markets are interpreting positive news coherently so far this week but will follow the Employment reports closely. Commodities rose and this was reflected in the associated currencies with the AUD rebounding to 0.9225 and the KIWI just under 0.7800.
The RBA rate decision will be focal, with a slant towards loosening in the language, but expectations for actual rate cuts are low. Language from the ECB and B of E will be crucial later in the week and any observations by Fed members will be important.
Employment data in the States will be critical to market moves for the remainder of a shortened, holiday week in the US.
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by Collinson FX - 2:08 AM Wed 3 Jul 2013 GMT
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