Please select your home edition
Edition
SW newsletters (top)




Collinson FX: April 27, 2020 - Markets finish on a positive note

by Collinson FX 27 Apr 02:05 PDT 27 April 2020
Rawhiti - Mahurangi Regatta - Mahurangi Harbour - January 2020 © Richard Gladwell / Sail-World.com

Collinson FX: April 27, 2020 - Markets finish on a positive note

Markets closed out the week on a positive note, after a week of disruption, over the collapse in Oil prices. Oil prices turned negative in the week, for WTI May futures contract, reflecting the oversupply and full storage capacity. Oil prices have recovered back above US$17/barrel, but remain under severe pressure, as producers look to cut supply. OPEC PLUS has committed to substantial cuts and it looks as the US will join the party, in an effort to bring some semblance of normality to the markets.

The pandemic rolls on, but it appears to under control and contained. This allows certainty back in to markets and authorities can now plan the return of economic activity. This has already begun in Europe, with Germany and Austria phasing in economic activity, while many States in the US begin a return, in the coming week. The return of global economic activity is the only long term solution to oil and commodity demand. The rebound in oil and commodity prices has enabled the corresponding currencies, to regain lost ground. The AUD trades 0.6380, while the NZD regained 0.6000, as the Government moves from the extreme lock-down stage 4 to stage 3.

The coming week has an avalanche of global economic data releases, lead by GDP growth numbers and Central Bank rate decisions from the FOMC, Bank of Japan and ECB. These events have been largely ignored despite the shocking numbers, flowing into the statistics released, due to the historical nature. The events that markets have focused on are the control and containment of the virus and factors that impact that, thereby driving the re-opening of economies and the resulting damage that has been sustained.

Collinson FX: April 22, 2020 - Collapsed oil spreads

The collapse in Oil prices continued to dominate markets, as the impact flowed through into the banking sector and the wider equity markets. US equities have sustained massive losses in equities, in the first two trading days of the week, as markets consider the impact on the banks of the collapse in the Oil and Gas sector. President Trump tweeted his support for industry and instructed his Energy and Treasury secretararies to ‘formulate a plan’ to support the ‘great US energy companies’. The collapse in global demand has conspired with over production to provoke this situation and while there has been a deal with OPEC PLUS to limit supply, the only solution is to re-open global economies.

The coronavirus spread has passed it’s peak in both Europe and the US and that is why the market focus has been allowed to switched to the Oil & Gas crises. The heart of the problem remains the pandemic and Governments ability to re-open their economies. Germany and Austria are reopening their economies in Europe and the ZEW economic sentiment data showed a bounce, off from historical lows. The EUR remains steady, trading 1.0850, despite a powerful rise in the reserve, while the GBP crashed to below 1.2300.

The collapse in oil has had a domino effect on banking and the wider equity markets, which has driven risk appetite lower and flows back to the safe haven US Dollar. The collapse in oil has unsettled commodity prices and the associated currencies. The AUD fell back below 0.6300, while the NZD plunged below 0.5950, perhaps oblivious to the activities of the RBNZ. The RBNZ has expanded ‘QE’ as massive issues of Government debt is being absorbed by the Central Bank. This monetization of debt is a big red flag to most economists, but appears to be the new global norm, for most Central Banks. There is a price to be paid, in the near future, for this unorthodox monetary policy.

Oil has taken the platform from the pandemic temporarily, but the Central issue now is the impact the virus has had on global economies. When can these economies re-open and what devastation this has caused (short/medium/long term), which can only be assessed after the storm has blown over.

Catch the new look Collinson FX website at www.collinsonco.com

Disclaimer: The details expressed in this website and accompanying documents or transmissions are for information purposes only and are not intended as a solicitation for funds or a recommendation to trade. Collinson Forex Ltd accepts no liability whatsoever for any loss or damages suffered through any act or omission taken as a result of reading or interpreting any of the information contained or related to this site

Countries: | NZ: 0800 338 838 | AU: 1800 143 415 | NY: 1888 6257 833 | UK: 0800 0285 834 |

Related Articles

Collinson FX: June 30 - Markets shrug off numbers
The AUD trades around 0.6850, while the NZD attempt to hold 0.6400, in the face of a rising reserve. The economic data is coming off record lows, reflecting the various re-opening of economies, across the world. NZ and Australian infection levels re-emerged, contradicted the narrative of ‘defeating the virus' Posted on 30 Jun
Collinson FX: June 24 - Turnaround in Australia
NASDAQ surged to new record highs, boosted by stronger PMI data in Europe, Australia and the USA. The NASDAQ surged to new record highs, boosted by stronger PMI data in Europe, Australia and the USA. The Dollar continued to drift lower, with the EUR rising to 1.1300, while the GBP broke back above 1.2500. Posted on 24 Jun
Collinson FX: June 16 - Chinese spike starts scare
Chinese cases spiked up and fears over a second wave swept Asian markets, which flowed through to EU NZ and Australia have achieved ‘control and containment' of the virus, but they remain vulnerable to fears over a ‘second wave', while exposed to China trade repercussions. Posted on 16 Jun
Collinson FX: June 11 - Riots distract from China
The NZD spiked to 0.6570, following the Fed's announcement, while the AUD rallied strongly to 0.7050 Markets are caught in a short term economic euphoria, with the re-opening of global economies, but significant risks remain. Posted on 11 Jun
Collinson FX: May 29 - Massive Bull run underway
Markets have been on a massive bull run, ignoring the Chinese threat to global trade Markets have been on a massive bull run, ignoring the Chinese threat to global trade, reinforcing the prospect of a ‘V' shaped recovery. Global economic data has been so historically bad, it can only get better, supporting market moves. Posted on 30 May
Collinson FX: May 22 - Economies open successfully
The NZD fell back to 0.6115, while the AUD slipped to 0.6560, damaged by extremely weak flash PMI Markets drifted lower overnight, after posting record gains during a strong week supported by ‘vaccine progress' and Central Bank support. Economies across the world are re-opening successfully, without any major outbreaks in the coronavirus. Posted on 22 May
Collinson FX: May 5 - Gearing up or down?
The relative success of the lock-downs, will determine how quickly these economies re-open The AUD has fallen back to 0.6420, while the NZD holds 0.6030, as nervous markets watch the transition of the economies through the lock-down gears. Posted on 5 May
Collinson FX: May 1 - Reality hits Europe states
NZD jumped to 0.6135, as the RBNZ relaxed lending (LVR) ratios The shine came off the market recovery overnight, as reality sets in. The ECB left rates unchanged and announced they were fully prepared to act ‘as long as needed'. Posted on 1 May
Collinson FX: April 15 - NZ Exit strategy MIA
Markets finished the week strongly, with US equities rebounding from March lows US market's rebound continues. The NZD lock-down is far more severe and no planned date for an exit strategy, has disappointed markets, pushing the NZD back to 0.6080, despite the weaker reserve. Posted on 15 Apr
MBW newsletters (top)