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Collinson FX Market Commentary - Sep 14 - Brits lift on strong economy

by Collinson FX on 14 Sep 2017
J- Class Regatta - 35th America’s Cup - Bermuda June 19, 2017 Richard Gladwell
Market Commentary - Sep 14 - Brits lift on strong economy

Equities continued to bounce along at record levels in the US. The promise of a deal on tax reform has filled markets with confidence that would provide further momentum for markets. The Dollar was steady, with the Yen traded 110.50, while the EUR dipped below 1.1880. German CPI data was steady and European Industrial Production expanded at 4.3% allowing the narrative of a recovery to continue.

The GBP outperformed, as Unemployment dipped to 4.3%, in line with strong economic data in recent times. The AUD slipped below 0.8000, despite some positive consumer confidence numbers, as commodities soften. The NZD has been extremely volatile, as the national election approaches, driven by poll results.

Market Commentary - Sep 13 - KIWI moves up on poll result

The relief rally continued in the US, post IRMA, allowing equity markets to march in to record territory. The risk-on atmosphere permeated markets, with bond yields rising, along with equities. This supported the Dolllar, with the Yen back to 110.50, accentuated by the move away from safe haven.

Treasury Secretary, Steve Mnuchin, raised the potential of tax cuts by year end, adding he was considering back-dating them to January 1. Tax is the major building block, required to support the spike in confidence, supporting equities and interest rates. The GBP bucked the trend, pushing north to 1.3280, after strong local data supported monetary tightening.

The UK CPI rose 2.9%, while House Prices expanded by 5.1%, easing tensions surrounding Brexit. The rising Dollar squeezed the AUD, which drifted to 0.8020, while the KIWI rebounded. The NZD jumped towards 0.7300, despite a solid reserve, with opinion polls leaning towards the incumbents.

Market Commentary - Sep 12 - Confidence after the Storm

Hurricane IRMA fizzled to a tropical storm as it continued up the US mainland. The hurricane was expected to be a 'once in a lifetime event' but this did not eventuate. The expectations were built on the back of the devastation from Hurricane Harvey that hit Texas.

This was a great relief to markets as safe haven moves unwind. Gold prices drifted and bond yields returned to normal. The Dollar rebounded strongly, with the EUR falling to 1.1950, while the Yen reverted to 109.35. The focus will now return to Geo-Political crises over North Korea and economic developments.

The Dow surged over 250 points as confidence flooded back to markets. The AUD settled, ahead of important employment data releases later in the week, while the NZD held 0.7250. A modicum of normality has returned to markets with a sense of dodging a bullet!

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