Collinson FX Market Commentary - Dec 17 - KIWI fails to break through
by Collinson FX 17 Dec 2017 15:34 PST
18 December 2017
Superyachts racing Bermuda, America's Cup Superyacht Regatta, June 13, 2017 © Richard Gladwell
Collinson FX Market Commentary - December 16-17 - KIWI fails to break through
US equity markets closed the week out at record highs. The proposed US tax cuts may be signed in to law by Christmas. This inspired markets and looks set to trigger new rallies in the New Year. Confidence in the US is surging as the economy booms and corporate tax cuts will enhance this. The EUR traded 1.1750, while the GBP drifted to 1.3320, still impaired by 'Brexit' negotiations. Commodity currencies have regained some previously lost ground, with the AUD dipping back to 0.7630, while the NZD failed to breech 0.7000.
The last week before Christmas will move away from Central Bank speculation, towards growth, trade and confidence. Markets should close at record highs, assuming the US Tax reform passes, as expected. The exception will be the release of the RBA minutes which will expose the Banks sentiments regarding the state of the Australian economy and their planned monetary policy.
Collinson FX Market Commentary - December 15 - US raise rates
The Fed raised rates, as expected, while indicating there will be at least three more rate rises in the coming year. The picture painted of the US economy is bullish in the extreme. Tax cuts are expected to give the US economy a massive injection to an already strong economy. The ECB followed, by leaving QE in place, for the foreseeable future.
This was despite large economic reviews on the upside. The ECB expects GDP to improve to 2.4% for 2017, while 2018 is anticipating a rate of 2.3%, while inflation creeps north. The Bank of England left rates unchanged, in an effort to combat any disruptions caused by 'Brexit', although maintained future rises are on the cards. UK inflation is on the rise, rising to a 5 year high, putting pressure on the Central Bank.
The EUR trades 1.1770, ignoring the lack of central bank action, while the GBP hit 1.3430. The Dollar is in retreat and this was reflected across the currency front.
The NZD attempts to regain 0.7000, while the AUD rebounded to 0.7670, boosted by strong local employment numbers. Markets now focus on the passage of tax reform in the US leading in to Christmas.
Collinson FX Market Commentary - December 14 - NZD surges towards .70c
US equity markets rallied strongly ahead of the Fed's rate decision. The two-day FOMC is expected to result in a rate rise and perhaps indicate future activity over the coming year. Economic data has been strong in the US and equity markets have surged to record levels, dependent upon tax reform.
US CPI pushed up to 2.2%, reflecting growth in the economy, pushing for further action from the Fed. All eyes will be on the Fed and the accompanying rhetoric. The EUR slipped back to 1.1750, while the GBP traded 1.3350, ahead of both Central Bank rate decisions.
The NZD surged towards 0.7000, regaining lost ground and showing resilience. The AUD also managed to recover, pushing up to 0.7600, after recent vulnerabilities. Markets await the Fed.
Collinson FX Market Commentary - December 13 - NZD holds ground
The FOMC meeting began overnight and expectations are for a rate rise. Conversations now include the impact of tax cuts on monetary policy. Tax cuts would accelerate growth and thus encourage the Fed to a rapid return to normalised policy. The Dollar took heart, with the EUR falling back to 1.1720, while the Yen hit 113.50. The GBP drifted to 1.3320, under pressure from a rising reserve despite a rise in CPI inflation and House Prices.
The Bank of England will consider the strong growth when they make their decision on interest rises. The ZEW sentiment index improved in Germany, while drifting across the Eurozone, although little is likely to occur when the ECB meets.
Commodity currencies continued to consolidate, with the AUD trading 0.7540, while the NZD held 0.6900. Markets remain focused on the Central Bank activity and associated speculation.
Collinson FX Market Commentary - December 12 - NZD regains some ground
A quiet start to the trading week was interrupted by a bomb attack in New York. A Muslim terrorist attempted to ignite a pipe bomb which was contained without any deaths.
Markets are focused on Central Banks and speculation associated with their interest rate decisions. The Fed leads the 'big three', including the ECB and Bank of England. The Fed and Bank of England are far more advanced than the ECB on the yield curve. Inflationary growth is on the move in these countries while the ECB is experiencing 'green shoots'!
The EUR managed to regain 1.1800, while the Yen traded 113.30, although rhetoric will have greater impact than the actual decision. Expectations are high for a rate rise from the FOMC, while the Bank of England has a tightening bias, so any surprise would have significant impact. The NZD regained some recent lost ground, jumping back to 0.6900, while the AUD pushed above 0.7500.
The reserve will likely dictate commodity currencies over the next few days, although local data will effect local trade.
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