Collinson FX Market Commentary- August 30, 2013 - Wall St over Syria

by Collinson FX on 30 Aug 2013
Collinson FX market Commentary: August 30, 2013

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Equity markets resumed the rally as fears over Syria subsided. Obama does not have the resolve to act against the murderous Syrian regime and certainly not without the support of the UK and France. He has drawn a red line and felt obligated to act to preserve face but why bother? He has little credibility and the time to act has long past.

Wall Street are over it and further strong economic data has added to the rebound in equities. US GDP rose to 2.5% and Weekly Jobless Claims fell, continuing recent trends and allowing tapering from the Fed. Markets are more comfortable with the reduction in QE Infinity so expectations are for a settled period.

This will boost the USD as liquidity has tightened and this has been reflected in the EUR trading 1.3240 and GBP 1.5490. Commodities drifted and New Home Sales in Australia pushed the AUD back to 0.8910. The KIWI also dipped below 0.7800, with the rise in the reserve currency and a weakening of local business confidence.

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Collinson FX market Commentary: August 29, 2013

Markets recovered after initial fears of war subsided. It appears that Obama will use the toys that the American people gave him to back up an off the cuff 'red line' remark.

The US President had drawn a line in the sand and now needs to retaliate. This will not be a war and he will surgically target his retribution. He is not a warrior and he will not sanction war despite the 100,000+ people already killed in the civil war.

The Russians and Iranians have some stomach despite their military deficiencies.

Markets have recognised the limited action and recovered with little action in the FX market. The EUR traded around 1.3340 and the GBP 1.5530. Oil remained high and Gold bid, but this has not affected the AUD which has dropped below .8900 before recovering to 0.8910.

The KIWI has reflected risk and fallen back to below 0.7800. Uncertainty from the Middle East will impact and subvert markets so risk assets will be negatively affected.

Collinson FX market Commentary: August 28, 2013
Geopolitical events overwhelmed Central Bank activity and daily economic releases. US equities crashed with the impending military action against the Syrian regime. Chemical weapons may prove the trigger for the West to finally act to prevent a genocidal nation destroying its own people.

This has overshadowed the fixation with Central Bank activity and overwhelmed equity markets, who do not like war. Currencies remained steady with the EUR trading 1.3380 and the GBP 1.5540. US Consumer Confidence rose and the Richmond Fed Activity Index also beat expectations providing solid improvement in economic data releases but these were largely ignored due to international military activity.

The Case-Shiller Home Price Index also booked gains of over 12% and economic conditions continue to improve increasing the likelihood of tapering next month.Turmoil internationally does not assist risk sentiment and the AUD has now slipped below 0.9000.

The KIWI's recent weakness is manifesting, trading below 0.7800. Action aplenty in the Middle East has added further variables into the mix and markets hate uncertainty!

Collinson FX market Commentary: August 27, 2013

The Feds tapering program is again under scrutiny with data dependence the determinant and deteriorating economic reports conflicting with the introduction. Durable Goods Orders fell 7.3%, more than expected, and does not bode well for the Feds perception of the economic recovery and thus the reduction of QE Infinity.

The Housing data tonight will be a litmus test and any erosion of confidence may delay further talk of reduction in stimulus. The Dallas Fed Activity reported an improvement but economic data will be crucial during this week.

The EUR remained steady at 1.3375 and the GBP 1.5575. Commodities continue to drift and weakening trade data in NZ has confirmed a growth in Imports without any corresponding rise in Exports. The extension of credit and a booming Housing Market may be driving the consumer but reversing recently improving trade numbers.

The KIWI trades 0.7830 and below 0.8700 in the cross with the AUD. The AUD has held 0.9000 and awaits directional impetus from the US Central Bank.

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