Collinson FX Market Commentary - April 28 - NZ Central bank activity?

by Collinson FX on 29 Apr 2016

Yamaha (NZ) - Day 4 - ANZAC 18fters - April 2016 Richard Gladwell www.photosport.co.nz

Collinson FX Market Commentary - April 28 - NZ Central bank Click here to find out how to get Collinson FX's free iPhone app

Apr 28 - The FOMC meeting concluded as expected, with no change to the QE, but language suggesting a future rise. The Fed left out the previous 'risk poses', in the description of the global economy, setting up speculation for the much telegraphed interest rate rises. This is no surprise because global fiscal ineptitude and growth conditions remain dire.

Governor Kuroda is expected to announce further QE in the global currency wars while the RBNZ will be the first cab off the rank. The NZ Governor will be sorely tempted to cut rates, after recent rallies in the KIWI, while benign inflation data allows margin. Prudency should dictate pause, while the RBA will probably move to cut interest rates next week.

Australian inflation data was stunted, coming in at 0.2%, pushing the annual rate lower to 1.3%. The lack of inflation translates directly in to a lack of growth in the economy and crashed the currency. The AUD collapsed, to trade down to 0.7570, providing a boost to exports but hardly an endorsement of the economy.

This dragged the NZD back slightly, to trade below 0.6840, while the cross jumped noticeably. The Feds inaction was anticipated, allowing the EUR to settle around 1.1300, while the GBP held above 1.4500.

Look out for Central Bank activity from NZ and Japan to drive todays currency markets.

AON flies down the Waitemata - ANZAC Skiffs - Day 4 - April 2016 © Richard Gladwell www.photosport.co.nz

Collinson FX Market Commentary - April 27 - Antipodean currencies up

April 27 - Markets were in a state of limbo as the Fed sat down for their scheduled two day meeting. There are high indications of the status quo, continued QE and no rate rise, as economic data remains soft. Growth has been benign, globally, although there are green shoots in the commodity sector.

The Obama tour of Europe has presented an opportunity to bolster support for the UK to remain within the EU and this is being reflected in the most recent polls. The GBP has reflected this, moving up to 1.4575, but the state of flux remains. In the US, Durable Goods Orders were flat, while housing was static. New Home Sales contracted 1.5%, while the Case Shiller Home Price Index was flat, providing little impetus from a leading sector. The Fed is unlikely to act but analysts keenly await the commentary accompanying the statement.

The Dollar is soft, with the EUR rising to 1.1290, while the Yen trades 111.35. Oil prices lead commodities higher and bolstered the associated currencies. The AUD traded up to 0.7740, while the NZD moved up to 0.6875, awaiting the Feds decision. The Bank of Japan is also slated to add further QE on Thursday which will impact the currency wars.

Collinson FX Market Commentary - April 26 - Weak start to the Weak
April 26 - A quiet start to what promises to be an extremely busy week, dominated by an avalanche of global economic data, controlled by the Central Banks. The FOMC will hold a two day meeting, with no change to QE expected, although commentary remains central to market direction.

The Bank of Japan also releases Monetary Policy, later in the week, likely to confirm central participation in the Global currency war! The ocean of important economic data begins tonight after a quiet start to the week. Equities were softer while the Dollar drifted lower.

The EUR traded 1.1250, while the Yen slipped back to 111.0. Commodity currencies stabilised with the softer reserve, with the AUD holding 0.7700, while the NZD traded around 0.6850. On wards and upwards after a long ANZAC weekend in Australasia!

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