Collinson FX Market Commentary- May 22, 2013 - Recovery for ANZAC?

by Collinson FX on 22 May 2013
Collinson FX market Commentary: May 22, 2013

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The Ben Bernanke funded equity rally continued to march relentlessly on the back QE Infinity cloud. St Louis Fed's President, James Bullard, signalled that QE will continue to boost growth that has been slower than expected.

The Economic fundamentals are weak and thus Monetary Policy is being used to stimulate the economy. This has become a global phenomena with the ECB and Bank of Japan employing the same tactics. Monetary largesse has now spread to the stronger economies of emerging nations and commodity driven ones, such as Australia and NZ, as they combat 'currency wars'.

The trade exposed nations such as, NZ and Australia, have been hit hard by record currency rises for extended periods and now have resorted to tactics to reverse these inequities. The trend is turning and the advantage the USD, EUR and JPY have had is coming to an end. This will not assist export driven recoveries but the strength of the USD, despite QE, is on the rise. Bond yields have turned and equities are looking overbought. A correction in bubbles seems likely.

The EUR is trading around 1.2900 and the GBP 1.5275 reflecting the dire state of the EC.

Commodities have been on the decline with flagging Asian demand and a stronger Dollar but the recent declines have stabilised with the AUD 0.9825 and the KIWI 0.8175.

The rapid recent declines have been no surprise and long overdue.

NZ Budgetry conditions seem to be on the improve as the Government employs steady Fiscal rectitude unlike the record Budget blowouts across the Tasman. Treasury seems unable to read the progress of the economy with record misreads resulting record budget blow-outs year upon year!

The Labor Government have been quick to spend over estimated revenues resulting in a structural crises which should result in their removal from office due to incompetence. The Fed Minutes will be released tonight along with comments from 'the Ben Bernanke' which should drive equity, commodity and currency markets.

Collinson FX market Commentary: May 21, 2013
Markets took a breather from the boisterous rallies we saw in Equities and the Dollar last week. The 'Big Dollar' took a breather and allowed commodities to rebound along with the currencies.

The AUD moved back to around 0.9800 and the KIWI to 0.8175 supported by the commodity gains and the improved risk scenario. The EUR also regained 1.2900 and the GBP 1.5275 with liquidity flooded markets providing credit and the economic news thin. US equities were flat after the surge from last week with little data out to influence directional pulls.

The markets needs little to trigger further gains in equities as investor search for yield in the frenzied equity bubble. US markets will look closely as economic data releases this week while the political junkies are consumed by the scandals enveloping the Obama administration.

Central banks will be watched closely this week, as will the Housing Sector data out in the US.

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