Collinson FX Market Commentary - Aug 25 - Markets in panic, KIWI dives

by Collinson FX on 25 Aug 2015 Collinson FX Market Commentary - Aug 25 - Markets in panic, KIWI Click here to find out how to get CollinsonFX's free iPhone app

Markets were in turmoil to open the week. Chinese equities continued the melt-down, falling 8.5%, sending panic throughout global markets. The Dow fell 1000 points, at one stage, but rallied to to a mere collapse. Oil fell below $38, leading commodities to further lows, reflecting a demand collapse.

This should be considered a collapse in confidence in Central Banks and global monetary policy. The explosion of liquidity has destroyed the value of money and confidence, justified by a lack of inflation, enabling further indebtedness due to low service costs. The fight to the bottom on the currencies has destroyed creditabilty with the best performer, the EUR, which is the worst market! The EUR jumped to 1.1600, which is beyond crazy, but mirrors the reality of the once mighty Dollar.

Equities and commodities are reeling and are translated easily into the associated currencies. The AUD crashed to 0.7150, while the once resilient KIWI plunged to below 0.6500. Panic in the market has ensued and this happens to be 7 years from the GFC.

This is a serious situation and derives from Central bank ineptitude, which have acted on the lack of inflation, interpreted as positve but is a reflection of the lack of growth. There are many negatives, ignored by equity analysts, who have overinvested due to near free money!


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