Collinson FX Market Commentary - Aug 14 - Chinese problems spin on

by Collinson FX on 14 Aug 2015 Collinson FX Market Commentary - Aug 14 - Chinese problems spin Click here to find out how to get CollinsonFX's free iPhone app

Aug 14 - Equities rallied amidst a storm created by the double devaluation of the Chinese currency. The turmoil created globally was the surprise of the move rather than the reality of a move into the currency wars. This does raise questions as to the state Of the Chinese economy which may or may not play out in their statistics.

The surprise from Europe was a surprise rise in Greek GDP, improving to 1.5%, confounding most pundits. The EUR jumped to 1.1125, while the GBP consolidated above 1.5600, with little resistance from a lack-luster Dollar. U.S. Retail Sales rose 0.6%, while Jobless Claims rose, hardly Pushing the Fed.

Commodity currencies remain under extreme pressure due to the Chinese problems and are bouncing on major technical Support levels. The AUD traded 0.7360, while the NZD tried, unsuccessfully, to hold 0.6600, not helped by weak commodity prices. A close look at European GDP and Central Bank speculation will close the week!

Collinson FX Market Commentary - Aug 13 - The Dead Cat bounces
Aug 13 - Equity markets remain challenged as a result of desperate efforts from the Chinese. Currency devaluation comes as a big surprise to many, during a period of 'currency wars', with the Fed in supreme control. Devaluation is the ultimate option for debilitated economies, giving the devalued economies a boost, improving trade advantage. This is exactly what the Greeks need!

Unfortunately the Chinese have a fixed currency, similar to pre-float days in NZ and Australia. Floating currencies adjust automatically, apparently, but have been assisted or controlled by Central Banks. Chinese Retail Sales were flat while Industrial Production was lower.

Believing Chinese statistics is a leap of faith, at best, but even these are negative. Commodities engineered a 'dead cat bounce' allowing a recovery in the associated currencies. The AUD jumped back to 0.7370, while the NZD regained 0.6600, but technicals remain precarious. A relatively slow economic global data week, will be influenced by GDP data from Europe, but the story has been and remains China!

Collinson FX Market Commentary - Aug 12 - Chinese devalue, others drop
Aug 12 - The Chinese devalued their currency, which was considered one of the global economic problems, due to an 'overvalued' peg. This does reflect upon the dire situation facing the worlds engine room. The problems are far greater than the collapsed equity and real estate markets. This had an immediate impact on markets, with commodities resuming their downward spiral, while equities plunged globally. Commodity demand is seriously impaired while energy markets are flooded with oversupply.

This hit the associated currencies hard, with the AUD falling below 0.7300, while the KIWI retraced to 0.6525. These are seriously testing technical levels and a breech could trigger big falls, especially in the case of a vulnerable NZD, enhanced by activist RBNZ. The EUR held 1.1000, with currency wars extending to China, scuttling chances of US interest rate rises.

Collinson FX Market Commentary - Aug 11 - KIWI extremely vulnerable

Aug 11 - After a disappointing previous week equities in China and the US sparked into life. Chinese equities jumped 4.5%, boosted by speculation of further Government intervention, restoring confidence in global equites.

US markets took the lead, which was enhanced by a Berkshire-Hathaway takeover. The surge in equities was a badly needed boost to confidence but a slow week in economic data release will test the validity of the rally. Later in the week, US Retail Sales and growth data from Europe, will be big market drivers but speculation on Central bank activity and corporate M&A may impact prior.

The EUR managed to regain 1.1000, while the GBP attempted to break back above 1.5600, looking for a positive growth story in a challenged zone. Commodities are stabilising, after a torrid run downwards, which has sorely tested the associated currencies. The AUD is regaining 0.7400, while the NZD looks to build support around 0.6600, but the KIWI looks extremely vulnerable on technicals!?


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