Collinson FX Market Commentary: April 3, 2013 - Equities' virgin land

Wired (Bakewell-White 52) - 2013 Auckland Cup, Day 3

Collinson FX market Commentary: April 3, 2013

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The Bernanke Equity bubble continued to grow as equities reached further virgin territory. The sheer volume of liquidity being pumped through QE has overwhelmed markets looking for a positive return forcing them into equity markets.

The latest rally was sparked by a rise in Factory Orders (3%) although New York's ISM fell from 58.8 to 51.2. The string of improving economic data in the US is being tempered by contradictory evidence but the Bulls are taking the positives. Fed member, Lockhart, has hinted at reduction in QE as economic conditions improve this year but April is normally a very positive one for equities.

Be prepared for a substantial correction in May as technicals and fundamentals collide. European triggers will remain as conditions remain volatile. EU Unemployment rose to a new record of 12% and PMI all held record low levels. The EUR was weak trading 1.2820 and the GBP 1.5115. The RBA held interest rates at 3%, keeping the powder dry, with commodity prices contracting giving little impetus to the currency.

The AUD held 1.0450 and the KIWI moved to 0.8400 with an improving mix of local commodity prices. Markets will continue in this fashion, save any eco-political surprises from Europe or a dramatic reversal in major economic fundamentals.

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