Collinson FX Market Commentary- August 6, 2013 - Fonterra fallout

by Collinson FX on 6 Aug 2013
Collinson FX market Commentary: August 6, 2013

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Newsflash: Reserve Bank of Australia cuts the official cash rate by 0.5% to 2.5%. After the rate cut the AUD rose against the USD

Action aplenty across the markets with local news dominating for a change. The Australian election was called Sunday for September 7th and this will finally give the people a chance to select the PM! The chaotic shambles that Labor has lead Australia through has wasted a mining boom and destroyed the fiscal position and budget.

The Reserve Bank will act monetarily today by cutting rates in an attempt to stimulate a flagging economy, but it will take a 0.5% cut to impact markets. The currency has reflected the deteriorating economic and fiscal conditions, falling from 1.0600 to 0.8900 in the last couple of months. The KIWI has also had shocking news with the Fonterra botulism warning. Dairy is the major reason for NZ success in export rebuilding after the GFC and any major hits are likely to have dire effects on the local economy.

The KIWI reflected this with a break in to the 0.77's but recovered overnight to 0.7800. European markets were steady with some flat PMI data and improving economic confidence. Confidence still remains negative and EU Retail Sales contracted 0.9%. US Markets drifted lower with some good news threatening QE infinity. The ISM Non-Manufacturing Index rose to 56 from 52.2, beating expectations, throwing doubts on the continuation of QE Infintiy which was endorsed by Dallas Fed President Fisher.

Equities dipped although the Dollar was steady with the EUR 1.3250. The GBP rallied to 1.5350 after stronger PMI Services data boosted prospects. All eyes will be on the RBA in local markets and global moves will continue to be determined by Central Bank activity and the economic data that drives them.

Collinson FX market Commentary: August 5, 2013

The big news to close the week was a miss in Non-Farm Payroll expectations. The markets were expecting 185,000 but received only 162,000, although the Unemployment rate fell to 7.4% due to falling participation. The news was not good, but the markets took it in their stride with little movement after Bernanke's reassurances earlier in the week.

The EUR traded 1.3275 and the GBP 1.5300. Central Bank support from Europe ad the US has reinvigorated equity markets and continue to inflate the bubble. Commodities drifted as demand from China contracts and economic conditions deteriorate. The AUD now broke below 0.8900 after a string of weak economic data and a massive write down in Budgetary conditions.

The Budget is now in crises and with an election looming (SEPT 7TH) it is hard to see these economic vandals being re-elected! The NZD/USD and its crosses have opened the week considerably lower, than its .7850 close on Saturday am, at .7725 as the news from the Fonterra milk powder crisis hits the airwaves....look for more volatility here as events unfold. This week will continue to be dominated by Central Banks with likely cuts from the RBA!

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