Collinson FX Market Commentary - Oct 26

Collinson FX Market Commentary - Oct 26 - Conflicted Dollar

by Collinson FX on 25 Oct 2016

Mayhem - Start of PIC Coastal Classic - October 21, 2016 - Richard Gladwell www.photosport.co.nz

Collinson FX Market Commentary - Oct 26 - Conflicted Dollar

Oct 26 - Equities came off the boil overnight, in both Europe and the US, while the Dollar rally faded. US Consumer Confidence slipped back to 98.6, from 103.50, reflecting the weakness in the base of the economy...the consumer! The S&P Case Shiller Home Price Index posted some gains, but these are marginal and unstable, as recent housing data has shown.

The EUR pushed back to 1.0900, while the GBP dipped below 1.2200, reflecting a conflicted Dollar. The Fed are likely to leave rates unchanged next week and the focus remains on the December meeting. It is widely speculated that the Fed will raise rates, giving some impetus to bond yields and the Dollar, but rhetoric has failed at every post this year!?

The NZD stabilised around 0.7150, while the AUD managed to consolidate above 0.7600, ahead of the important CPI number release today.

The inflation data is expected to show a rise in inflation and thus growth. This would support the local currency but any failure in the CPI data would impose significant downward pressure on the AUD.

Start of PIC Coastal Classic - October 21, 2016 - Taipeng © Richard Gladwell www.photosport.co.nz

Collinson FX Market Commentary - Oct 25 - Oil does a quiet slide
Oct 25 - Manufacturing PMI was released in both the EU and the US. The EU was a slight improvement, led by Germany, while the US was a reasonable jump in manufacturing PMI. This enable a steady start to the week, with equities climbing, along with the Dollar, with positive information driving speculation of a rate rise.

The Dollar has remained firm, with the EUR slipping to 1.0850, while the GBP has held above 1.2200. Oil has quietly slipped below $50/barrel, as the Iranians refuse to cooperate with recent OPEC agreements to limit production, allowing a massive surge in supply as Iran returns to global markets.

The rising reserve and weaker commodity prices impacted the associated currencies, with the AUD testing 0.7600, while the NZD dropped back to 0.7110. Central Bank activity remains the major driver of currency direction, with economic data release, influencing the discussion.

Start of PIC Coastal Classic - October 21, 2016 - © Richard Gladwell www.photosport.co.nz

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