Collinson FX Market Commentary - Aug 2 - USD rebounds

by Collinson FX on 2 Aug 2017 Collinson FX Market Commentary - Aug 2 - USD rebounds

The Dow surged through 22,000, making every post a winner, supported by market optimism and earnings. Equity markets have been soaring, with abounding confidence, since the election of President Trump. De-regulation is well underway, while the promise of tax reform has been a fundamental, thus essential to support the bull market.

The Dollar showed some life overnight, with the EUR drifting back to 1.1800, while the Yen settled 110.20. The GBP bucked the trend and pushed through 1.3200, with strong Manufacturing data, going the opposite way to the weaker EU PMI data. The RBA left rates unchanged, while the economic forecast were unaltered, although the statement did voice anxiety over the rising currency.

This ensures no relief from the benevolent monetary policy for some time to come. The AUD slipped back to 0.7960, under pressure from the reserve rally, while the RBA 'jawbones'.

The NZD was also hit by the rebounding Dollar, falling back towards 0.7450, awaiting local employment and house price data. The NZ election campaign is heating up, with musical chairs from one of the opposition parties, allowing a freshman, novice to ascend.

Collinson FX Market Commentary - July 30 - AUD rises higher

US GDP growth came in at 2.6%, heading in the right direction, showing progress. The US economy needs a quantum shift and that is tax reform. Healthcare reform in the US has failed and now tax reform is essential for the economy and the political future of the Trump administration. European economic data has been on the improve, while growth in the form of GDP and measured CPI, both improved.

US data, in contrast, has been flat allowing a realignment in the currencies. The Dollar has retreated, with the EUR trading up to 1.1750, while the GBP hit 1.3150. The Fed had left rates unchanged but signalled a tightening of monetary policy but this failed to move the dial. The reserve weakness has directly impacted the commodity currencies, with the AUD pushing towards 0.8000, while the NZD broke through 0.7500!

Central bank actions, led by the RBA and Bank of England, will drive local currencies and give a good read on global economic conditions. European and US PMI data, growth and jobs will also ensure plenty of action in markets in the coming week.

Collinson FX Market Commentary - July 27 - Oil up after meeting

The Fed left rates unchanged, as expected, but adjusted the language surrounding the reduction in the balance sheet. QE was scheduled to be unwound and the language changed to the unwind beginning 'relatively soon'. This did little to arrest the fall in the Dollar, with the EUR testing 1.1700, while the GBP approached 1.3100.

Oil prices continued to post gains, pushing up to $48.50, as a direct result of the Russian led OPEC/Non-OPEC meeting. US Housing data continued to improve and this leading sector may lead the economy but tax reform is sorely needed.

The flagging reserve allowed commodity currencies to continue to gain ground, with the AUD breaking above 0.7950, while the NZD pushed above 0.7450. Australian CPI data was positive, but weaker than expected, raising question on growth in the economy. This should create downward pressure on the AUD but the global weakness in the US Dollar has overwhelmed.

Collinson FX Market Commentary - July 26 - AUD on the move

The OPEC and Non-OPEC meeting resulted in rises in Oil prices, hitting $48/barrel, but it will be whether the rally is sustained? Earnings season drove US equity markets higher, with most meeting or exceeding expectations, allowing share prices to continue on their merry way.

US House Prices were firm and Consumer Confidence also booked new highs, ahead of the FOMC meeting. The Fed is expected to leave rates unchanged, but speculation around the reduction the bloated balance sheet, will drive currency markets. Yields are firming in anticipation.

The Dollar was steady ahead of the meeting, with the EUR trading 1.1650, while the GBP held 1.3030. Stronger commodity prices are sustaining the rally in the associated currencies, with the AUD moving to 0.7940, while the NZD holds 0.7400. Local NZ trade data may impact the local currency in the day's trade but big moves will be made under the influence of the FOMC!

Collinson FX Market Commentary - July 25 - Oil production limited

OPEC and Non-OPEC Oil producers are meeting, with Russia taking a leading role, in an effort to limit production to reduce stocks. Oil has shown limited upside, in the last week, but remains fundamentally challenged. The oil price is the life blood of Russia and OPEC but demand and oversupply have limited any upside.

The USD has been under great pressure, with the EUR up to 1.1650, while the GBP tests 1.3000. The GBP has rallied, despite pressure from Brexit negotiations, but GDP growth will be the next big test. The FOMC will meet in the coming week, with no expectations of any moves, although speculation will drive currency markets.

The AUD has settled around 0.7900, with huge gains being digested, while the NZD spiked to 0.7450. Growth, in the form of global GDP and CPI, will be significant litmus tests in the coming week.

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