Collinson FX Market Commentary - July 15-16

Collinson FX Market Commentary - July 15-16 - US Dollar hit hard

by Collinson FX on 17 Jul 2017

Ranger - J-Class Regatta - Bermuda, June 2017 Richard Gladwell www.photosport.co.nz

Collinson FX Market Commentary - July 15-16 - US Dollar hit hard
July 15-16 - US Inflation data disappointed and Retail Sales contracted. Key economic data confirms the dovish tone Yellen took in her commentary on future monetary policy before congress. The CPI number was zero, reflecting inflationary pressures and stagnant growth, which allow for a continuation of extremely generous monetary policy and a stay on rate rises.

This allowed equities to reach new record highs while the Dollar was hit hard. The EUR jumped to 1.1460, while the GBP spiked to 1.3100, as positive momentum shifts from the US to Europe. The Yen has quietly moved to 112.50 with the slow unwind of the Dollar. Commodity currencies were the major beneficiaries of the melt down in the reserve.

The AUD jumped to 0.7820, while the NZD consolidated above 0.7300, echoing the global move against the Dollar. The coming week will provide plenty of cannon fodder in the form of global economic data releases and Central Bank activity. The ECB will be a major influence, in the coming week, while RBA minutes and Employment data will drive local currency moves.

Topaz - J- Class Regatta - 35th America's Cup - Bermuda June 19, 2017 © Richard Gladwell www.photosport.co.nz

Collinson FX Market Commentary - July 14 - US Dollar drifts

Yellen appeared in front of the Senate and reiterated the previous appearance in front of Congress. The continued rise in interest rates, is expected and the contraction of monetary policy, gradual. There was nothing new in her comments which were measured and deliberate. Equities rallied to new record highs, while the Dollar drifted, despite a rally in bond rates.

The EUR trades around 1.1400, while the GBP pushed up to 1.2950, supported by steady economic data. Chinese trade expanded, with increases in both Imports and Exports, allowing a demand driven rally in commodities. The associated currencies responded accordingly, with the AUD consolidating above 0.7300, while the NZD spiked above 0.7300.

Markets will now close the week with a look at inflationary pressures in the US economy, with the release of the US CPI number, while the consumers health will be tested with the release of US Retail Sales data.

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