Collinson FX Market Commentary - Nov 5-6 Reality revival for NZD

by Collinson FX on 6 Nov 2017 Collinson FX Market Commentary - Nov 5-6 - Reality revival for NZD

Markets were steady, to close the week, after a couple of big announcements in the USA. Republicans tabled their Tax Reform Bill in the House and Trump announced Jay Powell as the new Fed Chair. These were both expected events, but necessary, as expectations remain high. The Dollar remained bid, with the EUR trading 1.1650, while the Yen moved above 114.00.

Non Farm Payrolls missed expectations, although Unemployment dipped to 4.1%, from 4.2%. Disarray in the Australian Politic remains, with the eligibility issue questioning the validity of the Liberal/National Government. The currency has been under pressure, falling to 0.7640, while the NZD looks to regain 0.6900.

The KIWI has also been under political pressure after the formation of the left leaning Government. Reality has removed some of the fears, allowing some recovery in the currency, although policy will drive the economy. Watch this space.

Collinson FX Market Commentary - Nov 3 - Questions remain over KIWI

US markets were static overnight after the release of the new tax reform plan. The new Tax plan cuts taxes and simplifies the deductions, which should have universal approval, although politics is likely to raise opposition. The other major announcement, is the Fed Chair, which is Jerome Powell. He is not the hawk, so Fed policy will not see an upheaval, allowing markets to breathe a sigh of relief.

The Dollar slipped, with the EUR pushing up to 1.1650, while the JPY trade around 114.00. The Bank of England raised rates, but the dovish rhetoric slammed the GBP, which crashed to 1.3050! Warning signals were apparent from the Bank of England Chair.

The AUD managed to book gains, pushing up to 0.7700, boosted by a rise in Building Approvals. Economic questions remain over the KIWI, with the new rainbow coalition policies undoing many of the previous governments achievements, pushing the NZD towards 0.6850.

Collinson FX Market Commentary - Nov 2 - AUD under extreme pressure


The Fed left rates unchanged, but the door is open for a rate rise in December, as expected. The ADP jobs report was positive, in line with market expectations, allowing markets to indulge themselves. The EUR drifted back towards 1.1600, while the GBP held above 1.3200, as the Dollar reigns supreme.

Commodity prices are soft but it is the political situations in Australasia that is undermining the local currencies. The AUD trades around 0.7650, with the local Government under extreme pressure from eligibility issues, losing the absolute majority in Parliament, The NZD is also under pressure, holding below 0.6900, although political expectations are low. Serious Government and positive policy announcements, may serve the economy well, which would be reflected in the currency.

Collinson FX Market Commentary - Nov 1 - KIWI business confidence slumps

French and EU GDP edged slightly higher, 2.2% and 2.5%, respectively. This was positive news for a politically wounded Union. EU inflation has been softer, drifting back to 1.4%, which is a warning signal to future growth. The problems surrounding the zone is the Catalonia Independence, which threaten European Unity, while Brexit repercussions continue to evolve. Spain has now threatened Catalonian leaders with sedition and rebellion prosecution. The heavy handed approach is perhaps a little too much stick?

The FOMC meeting dominates US market speculation and the naming of the next Fed Chair remains a hot topic of conversation. The Case Shiller Home Price index rose 6%, while Consumer Confidence continued to climb, in line with the string of recent economic data gains. The EUR traded 1.1650, while the GBP pushed back to 1.32570, as the Bank of England remains ahead of the curve.

Australian New Home Sales contracted 6.1%, while the nation remains unsettled due to precarious nature of the political situation, with the Government's majority in question. The AUD drifted below 0.7650, while the NZD is looking to test 0.6800, on the downside.

NZ Business confidence contracted sharply, down 10.1%, which is a real-time economic measure. Employment data released today will reflect historical economic performance. As the 'grand rainbow coalition' establish their agenda, adding flesh to policy bones, historical data will begin to reflect the direction of the economy under the new Government.

Collinson FX Market Commentary - Oct 31 - NZD stays steady

US equity markets opened softer for the week after rumours of a phased in corporate tax cut. The major political story for the week, was the indictment of a former Trump campaign manager, Paul Manafort. The charges relate to 10 year old actions and confirms the nature of the Mueller investigation, which has spread far from the original investigation, inferring there was little basis to the Russian collusion.

US Personal Income and Spending was steady, while EU Consumer Confidence remained negative, further confirming the relative economic space the respective zones are in. The EUR holds above 1.1600, while the GBP regained 1.3200, in a challenged single market. Growth remains weak, with German CPI dipping to 1.6% p.a., after the latest measure was 0.0%!

The NZD was steady, trading around 0.6850, while the AUD remains under pressure. The fallout from the loss of the deputy PM, after eligibility issues, has taken the AUD to 0.7650. The loss of a majority in Parliament and continued flagging poll numbers have hit confidence.

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