Collinson FX Market Commentary - Aug 10 - NZD does a weird rally

by Collinson FX on 11 Aug 2016 Collinson FX Market Commentary - Aug 10 - NZD does a weird rally

Aug 10 - There was little on the international front, in terms of economic data release, to influence markets. Equities drifted, as attention shifted to a falling Oil price, due to rising inventories and falling demand. This did little to dampen enthusiasm for commodity currencies, with the AUD breaching 0.7700, while the NZD moves towards 0.7200.

The NZD is rallying ahead of the RBNZ interest rate decision which confounds many as a cut in interest rates is expected. The rate is expected to be cut by to 2%, but this may be too little, too late. The RBA cut rates and the currency has rebounded strongly as interest differentials still prove attractive. The NZ rates provide an even greater incentive to investment. Too have the desired impact, the Governor must not only cut, but provide commentary of further cuts anon!

RBA Governor made comments about debt in his sayonara speech, advocating fiscal investment to compliment monetary stimulus, but only for investment and not current expenditure. The Keynesian philosophy is hardly surprising from a man of his vintage and his RBA management can hardly be questioned! Look for rate cuts and aggressive commentary from the RBNZ, but markets will likely shrug off initial softness!

Collinson FX Market Commentary - Aug 9 - RBNZ expected to get the big stick out

Aug 9 - Chinese inflation was steady, with a slight fall, from 1.9% to 1.8%. This confirms recent economic data reflecting the economic slow down and slowing commodity demand. German Trade numbers were on the rise, with a stronger current account and a corresponding improvement in both Imports and Exports, the sole beacon of light in a dark EU story.

The EUR pushed back to 1.1100, while the GBP lost the 1.30 big figure, slipping back to 1.2990. UK GDP was weak and Industrial and Manufacturing production confirmed a slowing post-Brexit economy. Commodity currencies held on to ground, with the KIWI moving back towards 0.7150, while the AUD consolidated around 0.7650. NZ Markets await some expected aggressive action from the RBNZ, while a quiet week will be keenly awaiting the US Retail Sales data.

Collinson FX Market Commentary - Aug 8 - Kiwi market chatter over RBNZ
Aug 8 - A quiet start to the week in equity markets with little data released. Chinese Trade balance improved, but as has been the way recently, for all the wrong reasons. Chinese Exports contracted 4.4% but this was overwhelmed by a 12.5% fall in imports! Global demand is flagging and that is the problem. Fiscal ineptitude and monetary policy largesse has done little to stimulate global growth and thus demand.

The EUR settled around 1.1080, while the GBP looks to test 1.3000, on the downside. US Markets are looking to the important Retail Sales number but will be impacted by daily economic and Geo-Political developments. NZ Markets are discussing the RBNZ rate decision, which is likely to cut rates, in line with other Central Banks. They would need to do this and indicate further rates to closely follow, to have a serious impact on the currency, as discovered by the RBA!

The NZD is supported by interest rate differentials and holds 0.7100, while the AUD trades around 0.7650. Global currency wars ensure only substantial resolve by the RBNZ will have an impact over the daily cycle.

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