Collinson FX Market Commentary: April 15, 2014 - Dead Cat bounce?

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Equity markets finally rebounded after the hammering to close out last week.

The week ended in hedge funds dumping risk, in the form of overvalued tech stocks, reflected in the pummelling the NASDAQ has taken recently. The Dollar also found some support with the EUR trading 1.3820 and the GBP 1.6725. The Dollar remains under extreme short term pressure with little support from the Fed. Contraction of the Fed's Balance Sheet to a more acceptable (Pre-GFC) level will bring concerted and long term support.

The question is when Yellen will reverse the extreme QE policies adopted by her predecessor and as a dove, one suspects, could be a long time coming!

Retail Sales in the US jumped 1.1%, beating expectations, and bringing some confidence to markets. Consumption is a major driver and recovery would signal a rebound in demand and support recent strength in the recovery.

The AUD is attempting to regain 0.9400 while the KIWI trades 0.8670. The RBA Minutes will be released, early today, which will give an insight into the perceptions of the Australian economy and likely strategies. Is this a 'dead cat bounce'?

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