Collinson FX Market Commentary: September 17, 2012 - Equities rally

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Collinson FX market Commentary: September 17 2012

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Equities continued to rally on the back of Bernanke's nuclear option. The release of the new QE3 allowing the Fed to buy $40 Billion/month for eternity has sent equity markets into a buying frenzy crashing through technical tops.

The overhwelming response is natural considering the promise of an endless supply of cheap money. The rally continued with some positive data assisting markets. University of Michigan Consumer Sentiment rose as did Retail Sales endorcing the rise in risk sentiment. Egan-Jones downgraded the US from AA to AA- but this failed to raise any fears. Manufacturing and Industrial Production in the US both slipped confirming the state of the US economy and exemplifying the reason for central bank interference.

The USD has been understandably trashed as the Fed washes away the value of the once mighty Dollar. The EUR rallied to 1.3115 and the GBP 1.6215. Rumours abound that a pending EU$300 Billion bailout of Spain is being considered by the Troika. The EC,ECB and the IMF would not discourage the bailout considering the contingency mechanisms they now have in place.

Commodities rallied as the USD faultered boosting the AUD to 1.0540 and the NZD to 0.8275. This week will closely monitor activity in the Eurozone with US economic data featuring Housing and Manufacturing.


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