Collinson FX Commentary: Jan 31 - First selloff for 2018
by Collinson FX 31 Jan 2018 04:42 PST
31 January 2018
Clockwork (Steve Mair) Day 2, Bay of Islands Sailing Week, January 25, 2018 © Richard Gladwell
Collinson FX Commentary: Jan 31 - First selloff for 2018
The Dow suffered the first major selloff for 2018. Bond yields are spiking, reflecting the growth function, operating boisterously in a booming economy.
The FOMC meeting begins and expectations are high for at least two interest rate hikes this year. Growth will be manifested in the CPI, inflation data, thus driving tighter monetary policy. US 10 year yields continued to drive north, exposing attractive investment opportunities, dragging on equities.
The EUR rebounded to 1.2400, amidst stronger GDP growth numbers, while the Yen traded 108.80. Commodities are conflicted between booming demand and a recovering reserve, with the AUD trading 0.8080, while the NZD regains 0.7325. The focus remains on economic data, Central Banks and the resulting impact on interest rates.
Collinson FX Commentary: Jan 30 - Boom times in US
Inflation became the hot topic of conversation, in the bullish US economy, to open the new weeks trade. The booming US economy brings with it inflation. The extent of that inflation is the key question to be answered and managed.
For the first time in a generation, inflation has been welcomed, even sought.
Central Banks have employed extremely loose monetary policy, to stimulate growth and investment, which would be reflected in growth and inflation. US bond yields popped overnight to reflect just this scenario. This temporarily halted the crashing Dollar.
The EUR slipped back to 1.2340, while the Yen traded 109.10, reflecting the resurgent reserve. This directly impacted commodity prices and the associated currencies. The AUD fell below 0.8100, while the NZD tested 0.7300, on the downside. Bond yields remain the focus, to see if the Dollar moves are a flash in the pan, or a trend reversal?
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