Collinson FX: August 3, 2018 - USD strengthens on higher tariffs
by Collinson FX 4 Aug 2018 21:42 PDT
6 August 2018
Oceanbridge NZL Sailing Regatta, Day 3, February 5, 2018, Murrays Bay SC © Richard Gladwell
Collinson FX: August 3, 2018 - USD strengthens on higher tariffs
Overnight sees the USD higher across the board as further “trade war “ tensions escalate as Mr Trump looks to raise tariffs against China some more. Clearly the Chinese aren’t impressed as their Minister of Commerce threatens to “retaliate to defend the nation’s dignity and the interests of the people and defend the common interests of all countries”. Further afield the Bank of England raised rates overnight by 0.25 % to 0.75 % but the GBP/USD came under selling pressure at the message was clear that further rate hikes are unlikely.
NZD crosses are all a bit lower as a result of the stronger USD with NZD/USD hovering around .6720 and NZD/AUD just under .9200 .NZD/CAD a bigger mover lower at .8820 as oil prices effect commodity currencies the most. AUD/USD has held up the best of these units sitting a bit lower at .7350 ,down from .7385 yesterday. Australian retail sales data is due out today, with little expected ,but market focus with be in US Employment data out tonight for short term direction.
Collinson FX: August 2, 2018 - US Trade sanctions broaden
US Markets look to the Fed for some direction towards the end of the day’s trade. It is highly likely they will leave rates unchanged, but are likely to signal further rises with a bullish economic outlook. The Dollar is pushing higher prior to the FOMC statement. The EUR drifted to 1.1650, while the GBP dipped back towards 1.3100, ahead of the important statement from the Bank of England. The ADP Jobs report, beat expectations, setting the stage for a strong Non-Farm Payrolls in the morrow.
Commodity currencies also suffered the rising reserve, with the AUD slipping below 0.7400, while the NZD surrendered 0.6800. Trade sanctions may now be imposed on Turkey, by the USA, in an attempt to address human rights and corruption. This is further evidence of escalating global trade wars, which impact trade exposed currencies incredibly hard. The NZD and AUD remain vulnerable, for this very reason and are at very exposed technical support levels.
Collinson FX: August 1, 2018 - Kiwi Business Confidence in negative
The economic news out of the EU was solid and underscores broad based growth. EU GDP was weaker than expected, but remained above 2%, while CPI inflation beat expectations. CPI inflation growth jumped above 2%, the highest in six years, while unemployment remains grimly high at 8.3%. The news reflects the ECB commentary of last week, confirming QE cessation by years end, allowing the EUR to hold 1.1700.
The Bank of Japan did nothing to surprise nervous markets, but the FOMC meeting and the Bank of England may deliver some hawkish rhetoric? Non Farm payrolls, ADP and The Challenger jobs reports, will add to the plethora of data releases this week.
NZ business confidence continue to hemorrhage, plunging to minus 44.9, although markets did not recognise the importance, with the NZD holding 0.6800. Trade risks remain for these trade exposed currencies, especially the China/US relationship, as China remains an important client to both Australia and NZ. The AUD pushed above 0.7400, aided by a spike in Building Approvals, while local markets await Manufacturing PMI. NZ local markets will focus on Employment numbers but the Central Bank activity and international data releases are likely to overwhelm.
Collinson FX: July 31, 2018 - Drifting hope for NZ confidence
This is set to be a massive week for markets, with an avalanche of global economic data releases and Central Bank rate decisions. The Bank of Japan will be first in the spotlight with nervous bond markets speculating on any inaction. The BoJ are unlikely to move and probably extend ‘QE’, thus dampening demand for the Yen. The Bank of England is mired in Brexit woes and fighting fires, thus preventing any aggressive moves on rates. There is growth and inflation and the Governor will need to address this looming problem, or face the consequences closer to ‘leaving’. The Fed will bring a healthy dose the of bullish sentiment to their decision, but raise or not, it is mostly good for the Dollar.
The Massive flood of global data will impact markets daily and in conjunction with the Central Bank rate decisions, we are in for a big weekend! The EUR sits below 1.1700, while the GBP trades above 1.3100, awaiting the BofE. The Yen trades 111.11 and the likely dovish approach by the BoJ is not conducive to any rallies.
The AUD trades below 0.7400, while the NZD attempts to regain 0.6800, but is increasingly impacted by the terrible Business Confidence numbers. This will be released today and the hope that they can stabilise a steady stream of disastrous numbers remains a drifting hope?
Collinson FX: July 30, 2018 - US GDP explodes
US GDP exploded, to rise by 4.1% in the second quarter and revising the first quarter up from 2% to 2.2%. Market expectations are being fulfilled and the post-GFC stagnation is being exorcised. The Trump Administration has been talking up the prospective, important growth numbers and they look to be achieving those goals. Obama called anaemic 0% to 2% the new norm. No, sorry!
The growth comes from a surge in Consumer Spending and Business Investment. This is a direct result of tax cuts and deregulation. Pretty simple really.
This follows a great week for global trade, with the EU/US agreement, while Treasury Secretary Munchin, signals the renegotiated NAFTA agreement is anon. These trade agreements were one major threat to global growth and releases a bit of pressure on trade exposed currencies.
The coming week holds massive prospects, with a flood of economic data releases. The US will be focused on employment data, with the ADP and Challenger Jobs reports a prelude to the Non-Farm Payrolls and Employment data. The FOMC meets and is likely to hold rates, but promote a strongly bullish economic sentiment, while the Bank of England is likely to be far more circumspect. The EUR trades lower at 1.1650, a victims of the Dollar bull-run, while the GBP holds 1.3100.
Trade exposed currencies benefited the EU/US trade agreement, but suffered a resurgent USD, with the AUD trading around 0.7400. The NZD trades below 0.6800 and is susceptible to Dollar strength, while the Business Confidence number this week, remains a threat.
Collinson FX: July 27, 2018 - No change from ECB
The ECB left rate unchanged and left the current QE in place until the end of the calendar year. The European Central Bank has confirmed improved economic conditions within the zone will allow the termination of QE by years end, although they do not foresee any interest rate rises for some time. They did cite protectionism as a risk to the zone and the global economy.
Trump and EC President Junker have agreed to work towards a tariff free trading zone, although this would surprise, as the EU is a trade zone created to advantage member States. Trump has forced their hand, with tariff threats and offers of a free trade agreement. The European will participate in the rhetoric but will have other avenues of protectionism. Reciprocal fair trade is the goal.
The EUR was flat, despite all the news, trading 1.1700. The Yen struggled upwards, pushing back to 110.80, while the GBP approaches 1.3200. Trade exposed nations are beneficiaries of trade agreements and thus the currencies responded well. The AUD holds 0.7400, while the NZD consolidates above 0.6800, ahead of key local confidence data.
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