Collinson FX: June 11, 2020 - Economic euphoria but significant risks remain

by Collinson FX 11 Jun 2020 13:56 UTC 30 May 2020

Wired - RNZYS Club Marine Insurance Winter Series - May 16, 2020 © Richard Gladwell / Sail-World.com

Collinson FX: June 11, 2020 - Economic euphoria but significant risks remain

The FOMC ended their two day meeting and left rates unchanged, promising continued support for the economy. The Fed predicted interest rates would remain at historical lows until at least 2020, and that it would take until then for the labour market to recover. The Fed predicted a contraction in US GDP, of 6.5%, the biggest since WW2. The headline, of this important Fed meeting, is the 'QE Infinity' will continue for the foreseeable future. Equity markets rallied on the back of this predictable outcome, as the ocean of cheap money seeks return.

The historically extreme lows in US interest rates and rising economic sentiment has allowed the Dollar to continue the safe haven retreat. The EUR rallied to 1.1400, while the GBP hit 1.2800, reflecting the Fed's monetary policy and economic confidence. Economies are re-opening across the world and this has boosted the trade exposed commodity currencies. 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. The virus is on the rise in some US States, while the China crises appears to have been relegated to the back seat, as the US copes with their internal riots and crises. China and the repercussions for the CCP's aggressive behaviour, remain the big risk to the vulnerable trade exposed economies and their currencies.

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: Sep 11: US Fed rate cuts expected
Chinese CPI inflation was negative. They almost have deflationary problems. A US CPI inflation rate of around 2.9% or less will ensure that a Fed rate cuts is almost a certainty. China's CPI inflation was negative, easing monetary concerns. AUD and NZD both rise slightly. Posted on 11 Sep Collinson FX: Aug 27: French Govt's woes hit Euro
European markets nosedived, triggered by the potential collapse, of another French Govt The minority Government has put the Budget up for a confidence vote, on September 8th (which is likely to fail), bringing down the Government. This was enough to poison European markets Posted on 26 Aug Collinson FX: Aug 26: Markets and data call tune
Equity markets took profit, following the big gains booked Friday after Powell admission Equity markets took profit, following the big gains booked Friday, triggered by admissions from Fed Chair Powell that rate cuts were due. Posted on 26 Aug Collinson FX: August 21: Bearish outlook for NZ
RBNZ cut rates 25 basis points, but the associated commentary was extremely bearish. The RBNZ cut rates 25 basis points, in line with expectations, but the associated commentary was extremely bearish. The RBNZ noted the economy was struggling and that further rates cuts were more than likely required. Posted on 20 Aug Collinson FX: July 17: Chase for Trade Agreements
These trade dependent nations are desperate to negotiate a deal with the US Trade dependent nations are desperate to negotiate a deal with the US, but are finding it difficult, to even secure a meeting. Posted on 16 Jul Collinson FX: July 10: "Wait and see"
This is more a ‘wait-and-see policy' than a ‘job-done', as the NZ economy remains on struggle street The RBNZ followed the lead of the RBA and left rates unchanged. This is more a ‘wait-and-see policy' than a ‘job-done', as the NZ economy remains on struggle street. Posted on 10 Jul Collinson FX: July 1: US Equities hit record high
TheCanadian Government could not hit reverse gear fast enough, on their brand new digital tax The Canadian Government could not hit reverse gear fast enough, on their brand new digital tax, following Trump shutting down trade negotiations. Posted on 30 Jun Collinson FX: June 27: Confidence builds in US
The US Dollar has been tumbling, as the need for a safe haven dissipates. Focus back on Trade Wars. US equity markets continued to rally as confidence builds. The US Dollar has been tumbling, as the need for a safe haven dissipates, while trade wars come back into focus. Posted on 27 Jun Collinson FX: June 18: Markets tumble again
Markets tumbled again overnight, with the Israeli war on Iran, totally pre-occupying markets. Markets tumbled again overnight, with the Israeli war on Iran, totally pre-occupying markets. The war rages on, with devastating air attacks launched and received, from both sides. Posted on 18 Jun Collinson FX: June 13: Xi bounces agreement
Xi bounces trade agreement that was a great deal for USA but very unfavourable to China. Reservations remain over the latest rendition of the US/China Trade Agreement. Trump announced it was a ‘done deal' and that China would pay tariffs of 55%, while the US would pay only 10%. This was not signed off in by President Xi. Posted on 14 Jun