Collinson FX Market Commentary: January 17, 2014 - NZD marches on

Auckland 18ft Skiff Championships - December 15, 2013

Collinson FX market Commentary: January 17, 2014, 2013

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Overnight US equities fell on the back of some soft earnings reports out of the US. European currencies experienced some volatility around the US data releases overnight. EUR/USD holding tight at 1.3600 .

The biggest story was the fast downward move of the AUD after they posted a poor jobs report for December, declining 22.6k. The AUD gapped from .8900 to .8800 very quickly but managed to stabilise overnight. All eyes on another RBA cut this year.

The benefactor of yesterdays result was the NZD/AUD which marched through .9400 and crept even higher toward .9480. Whats stopping it from going to .95 and beyond ? Tonight sees UK retails sales along with a raft of US data, Industrial production, Dec housing starts and University of Michigan Confidence survey. Kiwi Dollar remains firm at just under .8350

Auckland 18ft Skiff Championships - December 15, 2013

Collinson FX market Commentary: January 16, 2014, 2013

US Equities eliminated this years losses, with revised global growth prospects improving, according to the World Bank. The Bank revised Global growth prospects of developed countries higher as the economic recovery becomes widespread and entrenched.

Contraction of Monetary Policy is not seen as a boon for emerging economies who have been marked down. New York Manufacturing is improving strongly with the Index rising from 2.27 to 12.51, well in excess of expectations. Weekly Mortgage Applications improved by 11.9%, giving further evidence of a recovery in the Housing market. This is a boost to the Dollar with likely continued tapering to the QE Infinity program.

The EUR slipped below 1.3600 and the GBP retreated back to 1.6350. Commodity currencies continue to receive strong support but the rejuvenated USD has had an impact. The AUD is trading around 0.8900 and the KIWI back to 0.8330.

The Biege Book will give an insight into the Feds confidence in the US economy and confirm the relative pace of the contraction in Monetary Policy

Auckland 18ft Skiff Championships - December 15, 2013

Collinson FX market Commentary: January 15, 2014, 2013

US Equity markets rebounded after the stunning losses suffered the previous trading day. Losses were sustained due to fears over a weaker earnings season and the digestion of the horrible Employment data, Friday. Today Retail Sales improved 0.2% for the month of December, building on previous gains, supporting the theory of recovery in the all-important Consumer Sector.

The Economic situation seems to be improving and now leads to 'good news' being treated as 'good news'. The Dollar remains a litmus test and real improvement should be reflected in the growing strength of the reserve currency. The EUR was steady trading 1.3680 and the GBP 1.6450.

Commodities remained well supported and the associated currencies are well bid. The AUD is trading back under.9000 and the KIWI looks set to test 0.8400...this has pushed the NZD/AUD cross to above .9300.

They remain vulnerable to any big recovery in the USD and continued tapering of QE Infinity.

December 15 2013 18fter Auckland Championships

Collinson FX market Commentary: January 14, 2014, 2013

With little in the way of economic data release, markets were left to ponder the Fed. QE Infinity has flooded the markets with liquidity and tripled the Feds balance sheet.

The destruction of wealth and the US Dollar, has been enormous, but enhanced the competitiveness of America. The citizens are the major casualties, but equitiy owners, have gained much. Tapering has begun but the extent is not clear. The Eurozone has not fared well in the New Year and the EUR has dropped to 1.3650 with the GBP 1.6365.

The expansion of the money supply has undermined the value of the Dollar and has enhanced the prices of commodities.

The recovery in the associated currencies has begun with the AUD storming through the big, big figure and topping 0.9050 and the KIWI moving towards 0.8400. The weakness in the reserve currency is an indication markets do not believe that Yellen will continue tapering.


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