Collinson FX Market Commentary - Feb 12, 2016 - USD unwind continues

by Collinson FX on 12 Feb 2016 Collinson FX Market Commentary - Feb 12, 2016 - USD unwind Click here to find out how to get Collinson FX's free iPhone app

Feb 12 - Turmoil and volatility continues to dog markets overnight with risk on trades spreading chaos. The appearance of Yellen in front of the Congressional Finance Committee, was repeated again overnight, with further mention of the dreaded 'negative interest rates' !This has sent shudders through markets, as the realization that telegraphed interest rate rises, were unlikely and a rate cut may be the next move the Fed makes!

This ups the anti in these extreme currency wars. The Yen has been the 'poster child' of currency volatility as the savaging of the Dollar marches on. The Yen has moved all the way to 111, becoming a major hit to the Japanese economy, inviting intervention from the Bank of Japan!? The ECB is amidst a massive QE intervention yet the EUR has moved back above 1.1300!

The Dollar unwind continues and risk on trades smash global equities. This has allowed commodity currencies to eke out gains despite the embattled demand driven prices.

The AUD is pushing back towards 0.7100, while the NZD is heading towards 0.6700, bolstered by some reasonable local Manufacturing data. Central Bank activity remains the cat among the pigeons, driving global volatility, in an effort to combat economic demise.

Collinson FX Market Commentary - Feb 11, 2016 - Negative rates in US?
Feb 11 - Markets were dominated overnight by the Fed President, Yellen, appearing in front of congressional finance committee. Yellen was non committal to future monetary policy but emphasised the strategy was dependent on the economic situation. She was unsure whether the Fed would dare to move to negative interest rates, but the consideration must scare many, as future options to combat market turmoil dissipate.

This did nothing to address the recent Dollar unwind, with the JPY trading around 114, while the EUR held above 1.1200. Commodity currencies benefited the weaker reserve, with the NZD breaking back towards 0.6650, while the AUD tried to consolidate above 0.7100.

The excitement came on the Political front in the U.S. , with populist leaders Trump and Sanders, storming to victories in New Hampshire. This is a poke in the eye to establishment parties from the left and right, threatening the status quo and the gravy train. Promising extreme political entertainment to come! Meanwhile Yellen testifies again tonight!

Collinson FX Market Commentary - Feb 10, 2016 - NZD goes against trend

Feb 10 - Equities continued to drift lower adding to the massive losses accumulating so far this calendar year. There is little on the economic front to support confidence in the markets with banks now being impacted severely with connections to the energy companies undeniable. QE have driven interest rates to extremely low levels, negative in Japan, giving the banks little in the way of margins.

This phenomena is directly replicated with the Energy giants, whose trading margins have been savaged as the price of Oil trades below $30/barrel. The International Energy Agency reported slowing global demand and rising supply, with Iran re entering the markets, adding to downward price pressures. The U.S. now awaits Yellen's appearance in front of the Senates Banking committee, where it may reveal a reversal in monetary strategy, reflecting in the unwind in the Dollar.

This continued overnight with the JPY falling below 115, while the EUR hit 1.1300, despite the massive QE from the respective Central Banks!

The reserve weakness has allowed a recovery in the commodity currencies, despite weaker prices, confirming confusion caused by Monetary Policy. The NZD jumped back to 0.6630, while the AUD. consolidated around 0.7050, despite slowing confidence. Central Bank commentary remains the major driver of markets.

Collinson FX Market Commentary - Feb 9, 2016 - Doubt in global economy
Feb 9 - Equity markets continued with the major sell off to begin a new week. There was little economic data release globally, with China amidst their New Year celebrations, no real triggers. Markets turned to digestion of the U.S. employment data from last Friday, while looking ahead to Yellen's appearance in front of the Senate Banking Finance Committee.

There are lots of doubts in the global economy and the Feds projected strategy, of raising interest rates, in in serious doubt. Bond Yields are falling, contradicting the Fed, reflecting the economic situation. Oil prices slipped below $30/barrel as commodities drift lower.

This was reflected in the associated currencies, with the AUD falling below 0.7100, while the NZD traded below 0.6625. Central Bank largesse continue to dominate global markets with economic data feeding the narrative.

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