Collinson FX market Commentary: March 15, 2013
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The surge in equities continues unabated rising on the smell of an oily rag! Who would stand in front of a runaway freight train and the bulletproof bulls are on the march. The $85 Billion the Fed pumps into the economy has to go somewhere and the only place with return is equities.
Economic fundamentals have been positive thus encouraging the risk takers. The flow in to the US Dollar has turned with the EUR regaining 1.0300 and the GBP back above 1.5000. The AUD hit the turbo charger yesterday after an unexpected surge in Employment. The resilient Australian economy broke records adding 71,500 jobs for the last month.
The news alleviated further pressure for interest rate cuts and pushed the AUD to 1.0350. The RBNZ held rates unchanged and forecast no changes for the next year which released pushed the KIWI south.
The over-performing currency recovered overnight to regain 0.8200. Economic justifications seem marginal and a correction is likely but there is a world of pain for short positions at the moment.
Collinson FX market Commentary: March 14, 2013
Markets remained steady, unaffected by the election of the new Pope Francis. European markets were still decidedly weak still facing some extremely dire economic issues with only a dim light at the end of the tunnel. EU Industrial Production fell 1.3% as most member countries wallow deep in recession.
The EUR traded 1.2950 and the GBP 1.4925 reflecting the state of the Union with more downside likely. In the US, Retail Sales rose 1.1% which was a strong result and gave new impetus to the Bulls in the QE infused equity markets. Weekly Mortgage applications fell 4.7% which is a reversal of recent news in the housing sector. Economic fundamentals have been turning positive of late, giving markets confidence, but keep the powder dry as Bernanke has brought the US to this point and fiscal responsibility must now be adopted.
The AUD was trading just under 1.0300 after a boost of 2% in Consumer Confidence but political turmoil engulfs the nation. The KIWI held 0.8230 after strong rises in House Sales and Prices. The housing bubble frightens Reserve Bank Governors and this will alleviate any pressure to cut rates in today's meeting. Fundamentals will continue to drive markets for the rest of the week.
Collinson FX market Commentary: March 13, 2013
nsatiable bulls took a break in the US with equities drifting and the resurgent Dollar retracing. The EUR rebounded to above 1.3030 although the maligned GBP tests the big figure of 1.4800. The Pound is doing what it should do, reflecting the weak economy and falling, thus stimulating exports and raising the costs of imports. This will make it harder for citizens but it is how free markets work!
Many EU nations turn green looking at this phenomena and sink further into depression with austerity and a single currency reflecting the mess that is the union. The US continues to profit a new surge in confidence as equities hit all-time highs with the mighty peso! Bernanke has acted to destroy the strong dollar and create a new peso to battle the fiscal ineptitude of the socialistic policies Democrats have foisted on the once great!
There is no way out of this conundrum as any tightening of monetary policy would result in debt default. Fiscal rectitude is the only remedy for this immoral debt acquisition. Commodity prices remain strong, with Chinese demand steady pushing the higher yielding AUD back to 1.0300 and the KIWI to 0.8225. There are many serious questions to answer before this utopia becomes a reality as fundamental economic questions remain unanswered.
Collinson FX market Commentary: March 12, 2013
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 - 5:49 AM Fri 15 Mar 2013 GMT
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