Collinson FX Market Commentary- Apr 29 - Cash rate cut expected
by Collinson FX on 29 Apr 2015
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Collinson FX market Commentary: April 29 2015 -
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Advanced economies are drowning in money as global printing presses run hot! The avalanche of liquidity has lead to corrupted markets, with equities booming, currencies distorted and commodites reflecting demand constrained by a weak reserve. Promises of a return to normal monetary policy in the US, as economic conditions improve, have fallen by the wayside.
Economic data has been weak and now corporate earnings are being impacted. US Consumer Confidence plunged overnight, reflecting the dire state of the all important consumer, further dampening prospects of a return to normal interest rates. This was reflected in the Dollar, with the EUR surging to 1.0980, while the GBP jumped to 1.5325 despite weaker than expected GDP growth. Commodity prices have been boosted by weak reserve measurements rather than rising demand and therein lies the problem.
The associated currencies reflected recent moves, with the NZD moving back above 0.7700, while the AUD soared back towards the big number 0.8000.
Locally expectations are for the RBA and RBNZ to cut rates, joining the global currency wars, but ignored by markets as the Dollar phenomena overwhelms all. Australian Consumer Confidence has been on the rise, while NZ Trade numbers are set to reveal a surge, due to recent currency falls. Attempts by the local Central banks may be overpowered by stronger inactions in the Fed.
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