Collinson FX market Commentary: July 6, 2013
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US Equities, Bond Yields and the USD all up! What is wrong with this picture? Equities continue to rally on the overwhelming monetary stimulus being pumped in to the system by central banks and thus maintaining low interest rates to encourage growth.
All good, but then why do we see Bond Yields rising and the Dollar gaining in value? Bonds Yields are reflecting risk, as is the Dollar and this is the canary warning the miners. Non-Farm Payrolls beat expectations and added 195,000 Jobs, as it did last month, although Unemployment remained steady at 7.6%.
Energy prices rose because of the upheaval in the Middle East and not demand as was reflected in falling Metal and Agricultural prices. Lower demand was also impacting associated currencies with the AUD falling to 0.9060 and the KIWI testing 0.7700 again! The rise in the Dollar was reflected in the EUR which fell to 1.2820 and the GBP which was hammered to trade 1.4890!
Bullish sentiment on the markets are not represented in the real world on main street. Risk is on the rise so be prepared for some major moves across the markets when these worlds collide!
Collinson FX market Commentary: July 5, 2013
Equity markets continued the rally born in the US last night, with improving economic data lead by positive data numbers. US Markets were closed overnight for the 4th of July Holiday and are expected to be thin as Americans take a long weekend. European Markets rallied after the ECB and the Bank of England left rates unchanged and predicted them to remain that way for an extended period.
The EUR dropped on the news, back to 1.2900 and the GBP 1.5070. The B of E questioned the yield curve of future rates and commented rises were not warranted. The news was greeted in European equities but does confirm the depth of the economic malaise.
The UK received good news with strong New Car Sales and Hosing prices. The AUD has continued to rebound with the global economic news, trading 0.9150, but remains vulnerable with economic conditions deteriorating. The KIWI regained 0.7850, after also testing some lows, with support levels looking to be tested.
Look at Non-Farm Payrolls tonight and a surprise may cause a reaction but equities will remain slow with US holidays.
Collinson FX market Commentary: July 4, 2013
Business as usual in the Middle East as the Egyptian Military, for some reason, did not like their elected Muslim brotherhood President!?
Egypt has been a moderate voice in a world of extremists so attention must be paid to political upheaval. Oil up! This does have implications on global economies as uncertainty breeds volatility and more importantly, higher Oil prices. In Europe, the departure of a coalition partner to the ruling Portugese governing body has been unsettling and sends murmurs through the single market. Uncertain times have not effected the US markets as investors look to safety with equities and commodities rising.
The EUR has regained 1.3000 and the GBP 1.5275, with Services PMI data flat in the EU and further gains from the Manufacturing improvements from the UK. The ADP Private Sector Jobs reported an improvement of 188,000, which points to a stronger than expected Non-Farm Payrolls Friday.The good news was eaten up by the bulls who have resumed control of equity markets, but this will also reinforce Bernankes QE tapering which may impact negatively.
The AUD continues to test lower limits, trading around 0.9050, with capital divestment prominant and reflected in the declining local bourse. Political turmoil has continued with Rudd resuming the captaincy with similar success to the cricket team!
The KIWI has also been tarnished and trades around 0.7750, but may well test the downside big figure. Political instability and uncertain economic conditions do not bode well for global markets but attention will continue to focus on Central Bank activity.
Collinson FX market Commentary: July 3, 2013
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 - 12:09 AM Sat 6 Jul 2013 GMT
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