Collinson FX Market Commentary- September 12, 2014 - NZD loses ground

by Collinson FX on 12 Sep 2014 Collinson FX market Commentary: September 12, 2014

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Geo-Political events were simmering, with Obama finally making a commitment to combat ISIS, while the ceasefire holds in the Ukraine. With little on the economic front to occupy the markets attention turned to Central Bank speculation and a rising interest rate environment. This has served to bolster the Dollar which has had little in the way of competition.

The EUR looks insipid on 1.2920, while the GBP staged a comeback to trade 1.6220, supported by a Scottish poll rebutting recent gains by the Independence movement. Commodities have buckled under the pressure of the ‘Dollar revolution’ and that has directly impacted the associated currencies. The AUD continued to be directly impacted by the move in the reserve, moving to 0.9090, despite Unemployment falling from 6.4% to 6.1%.

A surge in the currency during domestic trade was overwhelmed by markets interpretation of commodity prices. The KIWI is collateral damage falling well below 0.8200. The NZD lost ground against most of the major trading partners. Currently trading against the EUR at 0.6302, GBP at 0.5015 and the JPY at 87.20. Still great buying against historical averages. All of the risk remains on the down side, perhaps shielded from major moves by uncertainty surrounding the upcoming political election. It is defiantly time to take stock of foreign currency risk with the ‘mighty kiwi’ losing its long enjoyed luster.

Collinson FX market Commentary: September 11, 2014

The Dollar rally continued, fueling speculation that this is the long awaited turn in the 'Big Dollar'. Recent improvement in economic data has raised prospects of interest rate rises which will further bolster the once mighty Dollar. The strength in the reserve has hit commodities and currencies with the AUD reflecting this dipping down to 0.9150.

The KIWI has also shed weight, trading 0.8220, although agricultural commodities have not suffered as much as the metals. The RBNZ will announce a suspension of their rising interest rate policy, but unfortunately not because of the damage done to the economy, but from doubts. Wheeler believes he is getting ahead of the curve rather than jumping the gun.

Geo-Political events will impact markets but Central Bank activity and commentary will remain the fundamental driver. The EUR remains vulnerable, trading 1.2900, while the GBP rallied to 1.6200 with the Scottish independence a central issue. The NZD is still trading strongly against most of the major crosses; AUD at 0.8950, EUR at 0.6350 and trading up against the JPY at 87.70 all still great buying.

Collinson FX market Commentary: September 10, 2014
Equities markets continued to tumble with markets nervous over the Scottish Independence vote and further sanctions imposed on Russia. Scotland hit the headlines when polls revealed that independence could become a reality breaking up the United Kingdom. Far reaching implications are being digested across Britain and Europe.

The EU imposed further sanctions on Russia while Russia threatened a response in terms of fly zone bans. The growing trade war could upset an already struggling Europe and stocks are reflecting this. The EURO settled around 1.2900, while the GBP looks vulnerable on 1.6100, despite talk of interest rate hikes on the horizon.

Apple revealed a new iPhone and a watch and that inspired the tech sector and the geeks. Commodities added to the losses with a mini revival in the reserve. The associated currencies reflected this, with the AUD falling to 0.9200 and the KIWI 0.8225. Mounting uncertainty is eroding global confidence and markets.

This helped the NZDAUD cross recover ground over the 0.8900 level. Despite a falling kiwi the crosses remained strong, especially the JPY, still trading above 87.00. The EUR and GBP crosses fell off a little to 0.6320 and 0.5090 respectively, still high against historical averages.

Collinson FX market Commentary: September 9, 2014
Equities drifted lower while commodities were hit across the board. Energy, Metals and Agriculture commodities all walked backwards, which did not assist equities, but may reflect a rally in the reserve currency. Trade data from the powerhouse states of Germany, China and Japan all improved with leaps in Exports, while Imports were static, if not lower.

These engines of manufacturing are performing well with the advantage of weak currencies (relatively) but unfortunately act as an island oasis while the rest of Europe collapses! The jump in the Dollar was reflected in the EUR, which fell to 1.2900, while the GBP was hammered with the prospect of a Scottish vote for independence.

Polls are pointing to a breakup of the UK and the GBP plunged two big figures to trade 1.6110. Commodity prices hit the associated currencies, with the AUD slipping below 0.9300, while the NZD gave up the recently achieved 0.8300. The shaky peace treaty is semi-holding in the Ukraine and the US is consolidating forces to attack. Geo-Political concerns have declined and close attention is being paid to economic data and Central bank activity.

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