Collinson FX Market Commentary: April 17, 2014 - KIWI treads water

- 2014 Etchells Nationals

Collinson FX market Commentary: April 17, 2014

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Equity markets continued the recovery after last weeks shocking sell-off.

Chinese GDP growth beat expectations, hitting 7.4%, but missed the previous 7.7% growth level. Chinese Retail Sales continued to expand, although this is marginal in terms of economic impact, as the economy is trade drvien unlike the domestic driven Western nations. This did support demand, halting the recent slide in commodities, underpinning the associated currencies. The AUD is attempting to regain the 0.9400 level and the KIWI was treading water around 0.8625.

The Biege Book confirmed 'modest or moderate' growth in the majority of districts covered and Yellen endorced the continued monetary stimulus. This did little to support the Dollar with the EUR moving up to 1.3820 and the GBP back to 1.6800. US Housing data was mixed, with Building Permits contracting 2.4%, while Housing Starts expanded by 2.8%. Mixed messages does little to inspire confidence after the bleak winter.

The bounce in equities is sustained this week although this will be tested by the Geo-Political developments in the Ukraine and further economic data releases. Nervous markets may lead to continued substantial corrections.

NZ Etchells Nationals 2014, Day 2, Race 3

Collinson FX market Commentary: April 16, 2014

US Equities continued the momentum upwards struggling to recover the massive hits taken last week.

The RBA minutes did not reveal any pending support for the AUD, in the form of interest rates rises, and the currency slipped back to 0.9350.

Commodities have also drifted lower lending little to the commodity based currencies. The KIWI also slipped back below 0.8650 in a risk averse environment. The CPI is released today and any breakout would lead to pressures on interest rates and the currency. The EUR has traded around 1.3800 with the important ZEW Economic Sentiment reporting Germany continues to improve while the Euro-zone stutters.

In the US, the Empire State Manufacturing index slipped, reflecting recent economic sentiment. Inflationary pressures are on the rise with unhelpful fiscal and monetary policies not helping.

The housing market has been a shining light in the recovery but looks to be coming into a testing period which would be a signal to the overall state of the economy. Geo-Political threats are on the rise in Central Europe with the fight for the Ukraine coming to a head.

Russia has the momentum and backbone with the West expecting them to behave in the modern PC way. Fat chance!

NZ Etchells Nationals 2014, Day 2, Race 3

Collinson FX market Commentary: April 15, 2014

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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