Collinson FX Market Commentary- April 30, 2014 - KIWI in RBNZ irons
by Collinson FX on 30 Apr 2014
Collinson FX market Commentary: April 30, 2014
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Day 5, 2014 Toyota Optimist Championships, Manly SC © Richard Gladwell www.photosport.co.nz
Equities rebounded today with Geo-Political fears subsiding and more focus on the US economy. The Fed met today for their two day meeting and expectations were for a further reduction in QE Infinity as the US economy recovers. The US will focus on employment this week with the ADP and Challenger Jobs report out this week, culminating in Non-Farm Payrolls, Friday.
The EUR was steady at 1.3800 and the GBP 1.6825 buoyed by GDP growth of 3.1%. The UK economy is showing signs of a stronger recovery, devoid of much of the the negatives, in the EURO. EU Consumer Confidence remains in the doldrums, at minus 8.6, reflecting the dire situation the single market continues to operate in. The GFC revealed the extent of the Eurozones financial problems which remain. The deficits continue drowning the participant nations in a mountain of debt which will drive this deep recession/depression for the next decade. NZ Trade continued to improve with both Exports and Imports on the rise. This shows a healthy demand onshore and off.
The KIWI still holds 0.8560 caught in RBNZ irons. The RBNZ raises interest rates, boosting returns for the carry trade, then 'jawbones' the currency lower at every opportunity. The higher rates of return and the improving economy, will ultimately overwhelm the rhetoric, which may in turn destroy the nations international competitivesness.
The AUD is struggling around 0.9270 with a total domestic pre-occupation on speculation over the looming Federal budget. Look for Geo-Political events and Central Bank activity to drive currencies and equities, with economic data, a daily influence.
Collinson FX market Commentary: April 29, 2014
Geo-Political developments worried markets, with tensions just below boiling point in the Ukraine. The Russians seem intent on destabilising the Ukraine, thus the unelected Government, in the lead up to elections. It is hard to these proceeding with the uncertainty engulfing the nation.
The US continues to talk and increase individual sanctions with little impact. All bark and no bite! This only serves to encourage US antagonists globally. Equities were mixed in a week of economic data releases highlighted by Growth and Jobs. The EUR pushed to 1.3850 and the GBP held 1.6800. Pending Homes Sales rose 3.4% for the month but remain heavily negative for the year.
Housing has been a major disappointment this year, considering the record low interest rates, thus the status of a leading indicator to the economy. The Dallas Fed Manufacturing Activity reported continued improvement in this sector emerging after the long hard winter.
The AUD traded steadily around 0,9250 in the lead up to the new Governments first budget. The KIWI was mixed, around 0.8520, with important trade data released today. This has been positive to date, in the rock star economy, but rising interest rates and currency will impact.
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