Collinson FX Market Commentary- Dec 24 - DOW surges on Santa rally

by Collinson FX on 27 Dec 2014 Collinson FX market Commentary: December 24, 2014

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Dec 24 - The DOW surged through 18,000 in the latest 'Santa' rally. The trigger was the growing confidence in the US economy fueled by lower oil prices and confirmed by an explosive GDP growth number. The historical growth number confirmed the economy surged, expanding by 5% annualised, far exceeding expectations. The stronger economy has lead the Fed to talk interest rate rises in the new year, but deferment, has allowed a surge in equities.

Markets are expected to be quiet between Xmas and New Year so a strong close to the year looks to be on the cards. The Dollar continued to rally with the EUR falling to 1.2170, while the GBP is breaking below 1.5500, with disappointing local growth data. US Home Sales declined, while House prices were steady, confirming recent weakness in this leading sector. Durable Goods Orders contracted 0.7%, but weak economic data, failed to dampen market confidence.

The reserve pushed the AUDUSD below 0.8100, while the NZD was testing 0.7700, on the downside. NZ Trade data was weaker, with steady exports, while a decline in imports reflected slowing demand locally. A strong close to the year echo the peoples spirit so 'Merry Christmas to all!'

Collinson FX market Commentary: December 20, 2014
Dec 20 - The week dominated by the Fed closed strongly with equities surging towards record highs and wiping out previous losses. Central Bank commentary served a lesson up to the markets that they remain the primary driver and determinant.

This is not free market capitalism and the massive distortions created through 'Independent' monetary policy has corrupted the flow of capital and thus tilted global markets. The Bank of Japan confirmed the 'battle to the bottom' fighting against the Fed and the ECB. The only player on the wrong stage is Wheeler of the RBNZ! Misguided Central Bank activity is not allowing the free flow of global markets but the RBNZ cannot swim upriver for too long!? The long term ambition for the Fed is to begin raising rates ..... manana!

The Dollar is on the rise and is likely to be the trend for 2015 thus adding to pressure on commodities and currencies. The EUR is now looking at 1.2200, with a red arrow, while the GBP struggles marginally to 1.5630. The reserve puts sustained pressure on the commodity currencies driving the AUD lower, last trading 0.8130, while the KIWI tries to consolidate around the 0.7750.

Christmas is upon us so expectations for any sea-change will be reduced. A good look at GDP growth in Europe and the US should confirm a fairly ordinary 2014, this week, while confidence may be reflected in the consumer with cheaper energy.

Collinson FX market Commentary: December 19, 2014
Dec 19 - Central bank intervention continues to dominate markets with the Fed Chairman, Yellen, confirming stronger economic conditions in the US will result in rising interest rates....but not yet! This was enough sugar for the addicted equity markets to surge upwards enhancing the previous days gains. The promise of future rate rises did support the Dollar which is now in a long term bull market.

The single currency fell back to 1.2280, while the GBP consolidated around 1.5660, boosted by strong local retail sales. Oil prices resumed downward momentum, testing new lows, pushing energy costs lower. Putin's annual address to the nation was positive and constructive, boosting local equities and the currency. NZ GDP numbers met expectations with the last quarter rising 1% to 3.2% annually.

Modifications to the methodology of growth calculation cast a shadow over the numbers but the economy looks healthy compared to most. The NZD traded 0.7725, while the AUD rose back to 0.8135, extremely battered after recent assaults. The NZD currently trades 0.6288 and 0.4929 against the EUR and GBP, booking small gains. The NZDAUD again tried to push through 0.9500 overnight but this level remains a solid psychological barrier that's hard to break.

Collinson FX market Commentary: December 18, 2014
Dec 18 - Oil(Brent) rebounded to $63 overnight pushing energy stocks higher and boosting equity markets. The Fed ends their two day meeting today and are expected to leave rates at record low levels for an extended period. The CPI number was lower than expected allowing freedom for the Fed to retain the 'free money' policies.

European CPI was also benign, which is an indictment of the lack of growth, as much as any win against inflation. The US Dollar surged back to trade EUR 1.2410, while the GBP retraced to 1.5650. The AUDUSD traded 0.8170, while the NZD fell to 0.7715 this morning. The Dollar strength has been reflected across the board and the Fed's inaction only serves to further enhance the rally. Speculation will begin on when the Fed will start to raise rates which will give the USD further impetus.

The NZD Currently trades 0.6207 and 0.4925 against the EUR and GBP, down slightly on yesterdays levels. The NZDAUD has been trading in a wide volatile range in the last 24 hours sitting 0.9440 this morning, down from a high of 0.9490.

Dec 17 - Oil prices continued to 'tank' which is destroying energy producers and companies associated. The Russian economy is in tatters and the currency is in free fall, reflecting the dependence on oil, rather than the sanctions applied over the Ukraine situation. Overnight the Rouble broke 70, to the USD, with rumors of intervention in the form of FX controls. The Central Bank raised rates by 6.5%, to 17%, in a desperate attempt to halt the collapse.

Oil demand is slowing, while production increases, and Chinese demand has hit all commodity prices. Chinese Manufacturing PMI contracted, to 49.5, further aggravating the situation. European equities surged, boosted by Manufacturing data, and a break out in ZEW Economic Sentiment in Germany and the EU. The EUR booked gains to trade 1.2500, while the GBP rallied to 1.5750. US markets were timid, in comparison to Europe, tainted by sobering housing data.

Building Permits fell 5.2%, while Housing Starts contracted 1.6%. US remains a safe haven play. The RBA minutes confirmed the consideration of future interest rate cuts and a desire for a lower AUD to stimulate a flagging economy.

The AUDUSD held 0.8200 but is under extreme internal and external pressures. The KIWI booked gains and look set to test 0.7800 looking more attractive to investors than it's Trans-Tasman cousin. The NZD currently trades 0.6218 and 0.4922 against the EUR and GBP.

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