Collinson FX Market Commentary - Sep 1

Collinson FX Market Commentary - Sep 1 - KIWI flounders

by Collinson FX on 1 Sep 2017

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

Collinson FX Market Commentary - Sep 1 - KIWI flounders

Equities are looking to close the month on a high. Equities have been under extreme pressure from Geo-Political events, US domestic politics and natural disasters. Markets have been resilient and look to close the August holiday month on a high. EU inflation data showed signs of growth, with the CPI rising to 1.5%, while Unemployment languished at 9.1%. Inflation is now a good thing, in the modern economic paradigm, as it reflects growth in an ocean of liquidity.

European economic data shows signs of life, but even the optimistic Unemployment data (9.1%), remains horrendous. Central Bank monetary policy has been extremely expansionary, globally, damaging real asset values. The Dollar recovery was interrupted with some disappointing economic data releases. Pending Home Sales contracted 0.8%, reversing recent housing trends, while the Challenger Jobs reported increasing cuts.

The EUR regained 1.1900, while the Yen pushed 110.00, reflecting a softer Dollar. Commodity currency reaction was mixed, with the softening reserve allowing the AUD to push up to 0.7950, while the NZD floundered towards 0.7150. The NZD has been under pressure for some time, leading in to a general election, with change to the left threatening economic stability.

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Collinson FX Market Commentary - Aug 31 - Antipodean dollars slide

US Equity markets continued to build, as economic data supported the recovery story, allowing the Dollar to regain some lost ground. US GDP increased to 3.0% p.a., while the ADP Private Sector Jobs report beat expectations, an omen for the important Non Farm Payrolls number on Friday.

The strong improvement in employment and growth has restored confidence and allowed markets to rally. The Dollar pushed the EUR back to 1.1880, while the Yen hit 110.40, reversing recent trends. Trump has moved on from the Texas floods to talk tax reform.

This is the key to supporting and enhancing this growth. The rising reserve hit commodity currencies, with the AUD slipping back to 0.7900, while the NZD fell below 0.7200! Strong economic data will support these strong markets and we have a plethora being released over the next couple of days. Geo-Political challenges from NOKO remain a threat but will be addressed.

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

Collinson FX Market Commentary - Aug 30 - Missile triggers sell-off

North Korea fired yet another ICBM, this time over Japan, in provocation. This reignited tensions, in the immediate area, but has further reaching implications. European markets were sold off, while awaiting the return of serve from NOKO's neighbours and the USA. Trump has warned that 'all options remain on the table' but Kim Jong-In continues to poke the bear.

The sell off in markets continued in to US trade but was considered, digested and dismissed. Equity markets roared back and eliminating early losses, brushing off the global threat, while recognising the extent of the storm-flooding of Houston.

The flooding in Texas is dramatic and will take some time to overcome. The S&P Case Shiller Home Price Index posted marginal gains, while US Consumer Confidence pushed around record levels, soothing nervous markets. The EUR is testing 1.2000, while the GBP regained 1.2925, amidst continued weakness in the Dollar.

Commodity currencies continued to recover recent losses, with the AUD pushing back to 0.7950, while the NZD approaches 0.7250. Reserve weakness is a common theme and the coming tsunami of global economic data will determine the validity of those moves.

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Collinson FX Market Commentary - Aug 29 - Pressure goes on US oil

The US is preoccupied, or drowned in the Hurricane, that is Harvey. Much of Texas has been inundated and will test resources. There is pressure on the local oil market. The Dallas Fed Manufacturing Activity Index remained steady and markets reflect this.

The Dollar has been under extreme pressure, with the EUR testing new highs, heading towards 1.2000! The GBP has been under extreme pressure, with Brexit negotiations testing sentiment, but Dollar weakness has allowed the GBP to recover to 1.2900.

The reserve has ensured recovery in the commodity currencies, as the AUD pushed towards to 0.7950, while the NZD regained 0.7250. An avalanche of global economic data will provide plenty of ammunition for the remainder of the week

Collinson FX Market Commentary - Aug 27 - Brexit bites

Jackson Hole was a fizzer. Yellen addressed the symposium in generalisations and offered no insights in to monetary policy. She did offer commentary on the Financial System, which she descried as sound, supporting the regulations post GFC.

This could be interpreted as a resignation letter for Trump who is adamantly opposed to Dodd-Frank. US Durable Goods Orders plunged, down 6.8%, along with the Dollar. The EUR jumped above 1.1900, while even the GBP pushed to 1.2880, despite Brexit negotiations this coming week.

The AUD took advantage of the weaker reserve, pushing back to 0.7940, while the NZD consolidated above 0.7200. The coming week is an avalanche of global economic data lead by US and EU Employment. There is a plethora of Manufacturing and CPI data also providing much fodder for markets. Expect a huge week!

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