Collinson FX: May 2 - Australia holds the line

by Collinson FX 1 May 2018 13:52 PDT 2 May 2018

Oceanbridge NZL Sailing Regatta, Day 3, February 5, 2018, Murrays Bay SC © Richard Gladwell

Collinson FX: May 2 - Australia holds the line

US equity markets took a dive ahead of the FOMC two day meeting. The Fed is expected to confirm growth and inflationary pressures and their willingness to combat this, through hiking rates. US Manufacturing PMI was flat but the Dollar continued to rally strongly ahead of the Fed's rate decision. The EUR is now testing the big figure, threatening to fall below 1.2000, while the Yen trades 109.60. UK Manufacturing PMI did nothing to arrest the plunging sentiment, with the GBP now trading 1.3620, erasing all previous gains.

The RBA left rates unchanged, holding at 1.5%, citing weak wage growth, a soft real estate market and low inflation. The RBA has held the line for 19 straight meetings and there is little chance of a change in the near future. The AUD has suffered accordingly, falling below 0.7500, aided and abetted by the strong reserve. The NZD is extremely vulnerable technically, testing the BIG figure, 0.7000!?

The Fed will dominate markets in tonight's trade.

Oceanbridge NZL Sailing Regatta, Day 3, February 5, 2018, Murrays Bay SC - photo © Richard Gladwell

Collinson FX: May 1 - Kiwi business confidence in Doldrums

Softer economic data from Europe and the US did little to discourage markets. German CPI was zero, in line with expectations, but hardly signalling any substantive growth. US Personal Income and Spending continued to show strong gains, although the Dallas Fed Manufacturing Activity Index and Pending Home Sales both softened. This supported the Dollar, with the EUR drifting below 1.2100, while the Yen trades 109.30.

Chinese Manufacturing, Non-Manufacturing and Composite PMI rose but did little to boost commodity prices or the associated currencies. The AUD is now testing 0.7500, on the downside, while the KIWI has a look at the BIG figure of 0.7000! NZ Business Confidence is in the doldrums, following a string of record falls, contracting 23.4. The NZ business community is not responding well to the 'Rainbow Coalition's' policies of rising taxes and regulation! Go figure?

A heavy week of global economic data releases, will provide fertile grounds, for market action. The Dollar remains in the ascendency, supported by rising interest rates and strong growth prospects.

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