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Collinson FX Market Commentary - Mar 19 - Handbrake pulled on excess

by Collinson FX on 19 Mar
29er - Oceanbridge NZL Sailing Regatta - Day 1 Richard Gladwell
Collinson FX Market Commentary - Mar 19 - Handbrake pulled on excess

What could have been a tumultuous week, Geo-Politically and Economically, faded into obscurity. The Fed raised rates, as expected, pushing a dovish commentary to calm any excesses.

The Dutch election saw the status quo come through virtually unscathed, allowing a massive sigh of relief for the EU, with the anti immigration party also being anti-EU. The coming week has no major events, although surprises occur and economic data releases, will have more impact.

The softer Dollar, allowed the EUR to trade up to 1.0740, while the Yen slipped below 113.00. US Manufacturing improved 0.5%, while Industrial Production was flat, although Confidence continued to edge higher. Commodity currencies managed to regain some ground with the softer reserve. The AUD pushed back to 0.7700, while the NZD regained 0.7000, awaiting Mondays Dairy Auction.

Collinson FX Market Commentary - Mar 17 - Dutch Brexit fails in poll

The Dutch elections spread relief through European markets after the failure of the far right, anti EU party to live up to pre-poll expectations. The preservation of the status quo, will reduce fears held for the EU, especially considering the pending elections in France and Germany.

The Bank of England left rates unchanged and QE in place. This was a precautionary measure to counter any economic upheaval caused by the actual Brexit. The UK economy has been remarkably resilient, despite all the pre-poll dire warnings of catastrophe, but the Central Bank has erred on the side of caution.

The Fed raised rates, as expected, but the dovish rhetoric from Yellen, did little to stimulate the Dollar. This allowed the GBP to regain 1.2350, while the EUR broke above 1.0700 again, despite flat CPI data. The softer reserve triggered a surge in commodity currencies, but overnight trade saw some settling. The AUD slipped back to 0.7660, while the KIWI drifted back to 0.6970, awaiting the resumption of the Dollar run.

Collinson FX Market Commentary - Mar 16 - US Interest Rate rises Dollar drops

The US Federal Reserve raised interest rates, for the second time post-GFC, confirming the embarkation of a rate rise program for 2017. There were no surprises and the associated commentary confirmed the economic recovery and calmed markets. 'Buy the rumour, sell the fact'!

The Dollar retreated after the anticipated rate rise, with the EUR rising back to 1.0680, while the GBP moved up to 1.2250. US CPI rose 0.1%, to 2.7% p.a., while Retail Sales inched up 0.1%. NAHB Housing Market Index jumped to 71, confirming the strong recovery in the Housing sector, supporting a leading sector. Oil staged a recovery, after taking a hammering over the previous week, but circumstances have not changed so Oil may resume its downward trajectory.

Commodity currencies gained ground as the reserve settled, with the AUD moving to 0.7650, while the NZD tested 0.7000. US growth, interpreted through economic data, will continue to drive markets.

Collinson FX Market Commentary - Mar 15 - Oil prices drop

Mar 15 - Oil Prices hit the headlines overnight, falling to $47.70, hitting energy companies and dragging equities lower. The lower prices are a direct result of oversupply, with global stocks rising, as production does not inhibit. Equities were not assisted with the prospect of rising interest rates, as the FOMC sat down for their two day meeting, with high expectations.

The rate rise will come and the frequency and amount of further rises will determine the ferocity of the Dollars bull run. This has continued to strengthen the Dollar, with the EUR slipping to 1.0600, while the GBP retreated to 1.2150. The EUR was not assisted by very weak ZEW reports from Germany and the EU, while the German CPI was flat and EU Industrial Production contracted.

Markets now await the Feds announcement tonight, with the commentary becoming hugely important, to determine reserve strength. The AUD held above 0.7550, while the NZD consolidated above 0.6900, keenly awaiting the determinations on US Monetary Policy. A simple rate rise may be treated as 'Sell the rumour, buy the fact' but the Fed's rhetoric will determine enthusiasm for the Dollar.

Collinson FX Market Commentary - Mar 14 - Big week ahead

Markets were steady on what could develop into a huge week for currencies. This coming week the UK look to trigger article 50, the 'Brexit' clause, which will impact the GBP. The Dutch go to the elections and a strong showing of the anti-EU parties could adversely impact the EUR, both short term and fundamentally.

The other event impacting markets is the two day meeting of FOMC, which is likely to embark on a rate rise program, adding to yields and boosting the Dollar! Markets will be nervous with anticipation, which has the potential to drive big moves, although all outcomes are predictable.

The EUR drifted back to 1.0650, while the GBP gathered momentum, trading up to 1.2250. Commodity currencies are completely open to reserve trading, with the AUD back below 0.7600, while the NZD has regained 0.6900. Rising yields should deliver a stronger Dollar although the GBP has potential to surprise while much of these moves are click here and here Or for the latest update click here

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