Please select your home edition
Collinson and Co

Collinson FX Market Commentary- August 8 2014 - Oz jobless jumps

by Collinson FX on 9 Aug 2014
RNZYS-Winter Aug 024 - RNZYS Winter Series, August 2, 2014 © Richard Gladwell
Collinson FX market Commentary: August 8, 2014!Click_here to find out how to get CollinsonFX's free iPhone app

Markets turned negative again overnight after warnings from the ECB. Mario Draghis comments came after an escalation of the Ukrainian crises, resulting in Russian sanctions, which impact global trade (especially Europe). Russia issued sanctions against Europe and the US for many food imports, which will have a greater impact on Europe's economy, as the Russian are their biggest client.

These sanctions are likely to impact world trade and effect their economies more than the sanctions imposed on Russia. Meanwhile Russia masses troops on the border threatening invasion. The EUR slipped back to 1.3350 while the GBP trade 1.6830.

The Australian Unemployment release shocked markets with the rate leaping to 6.4% from 6.0%. This is a 12 year high and spooked many analysts with the AUD crashing to 0.9270. The KIWI managed to hold around 0.8470, despite flagging housing data, accentuating the cross rate.

Geo-Political developments are now holding the whip hand but it is the economic fallout and Central Bank responses that control the marke

Collinson FX market Commentary: August 7, 2014
Hemorrhaging in the equity markets was stemmed overnight with the Geo-Political situation in the Middle East settling and the Ukraine temporarily quiet.

There were no major economic announcements although Russia responded to EURO/US sanctions. An economic standoff could be more detrimental, long term to both Europe and Russia. The USD has also taken a breather with the EUR 1.3380 and the GBP 1.6850.

NZ Unemployment fell more than expected to 5.6%, from 5.9%, but will probably revert now the RBNZ has interjected.

The good news was greeted with a fall in the currency, but losses were regained overnight, with high returns hard to resist. The NZD traded around 8460. The AUD pushed north to around 0.9340 reflecting softness in the reserve and stable domestic economic conditions. Central Banks continue to dominate and distort equity, currency and commodity markets.

Collinson FX market Commentary: August 6, 2014
The Dow was hammered again overnight with some insipid economic reports from Europe and the US and growing fears surrounding a Russian invasion of the Eastern Ukraine. Composite PMI from China, Europe and the USA contracted overnight reflecting the lethargy in the global economy.

The big fear is that the Fed will stop the avalanche of liquidity swamping markets and driving bubbles in equities and commodities. This has led to speculation that we may be seeing a major correction but Yellen is a dove and as such is likely to defer any action. Central bank activity has led to this situation, with banks enjoying huge advantages, while the populous suffer the destruction of wealth. The EUR continued on the well-worn path lower, trading 1.3370, while the GBP improved to 1.6875 with economic data bucking the European trend.

The RBA left rates unchanged, as expected, and continued the serious and conservative outlook on the economy. The AUD slipped back, with a strengthening reserve, trading around the 0.9300 mark. This contrasts the wonderland that the RBNZ live in, with premature rate hikes killing the economic rebound and providing the interest rate differentials that provide further incentive to drive the KIWI higher in the short term.

Jawboning hit the NZD, but the attractive interest rates will encourage further buying until the currency starts to impact the trade related economy and kills the recovery, thereby fulfilling the prophecy for all the wrong reasons. Flight to the USD sent the KIWI back to 0.8470 but Central Bank activity is the major driver of all currency moves.

Collinson FX market Commentary: August 5, 2014

Equity markets rebounded from the worst falls in two years in the previous week. Buffeted by Geo-Political issues and ambushed by the default in Argentina and the European Banking crises relapsing.

The Portuguese Central bank announced a EUR$4.9 Billion bailout of Banco Espirito Santo, but it is hard to understand the state of the European Banking system, with this occurring six years after the GFC. The ECB has flooded the Banks with cheap money which can be reinvested, virtually risk free for years in high yielding bonds, giving the recipients a free kick!? Geo-Political issues subsided with the Israelis calling a temporary ceasefire and the Ukrainians asserting increasing control over the Eastern rebels.

The EUR remains weak, trading 1.3420, while the GBP rebounded to 1.6850 with further signs of economic recovery. The Fed may now be under pressure to raise rates after QE infinity is completed. It is this that has spooked equity markets with a threat to the endless avalanche of liquidity.

It seems unlikely, with the GDP number being an annualized number of 4%, while in reality is little better than the first quarter contraction.

Australian Retail Sales increased 0.6% and Job Ads rose 0.3%, supporting a consolidation of the currency, which traded just above .9300. The KIWI creeps slowly back above 0.8500 supported by attractive interest rate differentials.

For more on Collinson FX and market information see: and

Countries: | NZ: 0800 338 838 | AU: 1800 143 415 | NY: 1888 6257 833 | UK: 0800 0285 834 |

Disclaimer: The details expressed in this website and accompanying documents or transmissions are for information purposes only and are not intended as a solicitation for funds or a recommendation to trade. Collinson Forex Ltd accepts no liability whatsoever for any loss or damages suffered through any act or omission taken as a result of reading or interpreting any of the information contained or related to this site.

Collinson and Co

Related Articles

Collinson FX Market Commentary - Oct 21 -
. .
Posted on 19 Oct
Collinson FX Market Commentary - Oct 15 - Positive sign from US sales
AUD breaks back above 0.7600, while the NZD looks towards 0.7100 again US Retail Sales met expectations and were positive! This gave the markets some enthusiasm and lead to further speculation for the much vaunted Fed interest rate rise. This took the shine off the equity rally. The University of Michigan confidence report was decidedly negative
Posted on 17 Oct
Collinson FX Market Commentary - Oct 12- Light week grinds idle minds
AUD dipping to 0.7540, while the NZD dipped to 0.7050 The EUR slipped to 1.1050, while the GBP tested new lows, falling to 1.2200. Commodity currencies were not immune, with the AUD dipping to 0.7540, while the NZD dipped to 0.7050. A light economic data week allows diversion and musing over Central Bank perceived actions.
Posted on 12 Oct
Collinson FX Market Commentary - Aug 10 - NZD does a weird rally
he AUD breaching 0.7700, while the NZD moves towards 0.7200. The NZD is rallying ahead of the RBNZ interest rate decision which confounds many as a cut in interest rates is expected. The rate is expected to be cut by to 2%, but this may be too little, too late. The RBA cut rates and the currency has rebounded strongly as interest differentials still prove attractive.
Posted on 11 Aug
Collinson FX Market Commentary - June 11 - A Canary in the Mineshaft
Commodity currency gains were undermined on Fridays trade, AUD falling back to 0.7380, while the NZD fell to 0.7050! The RBNZ had a bad case of inertia, fuelling rallies in the currency, but the macro picture remains the underlying power. Take note of global bond markets, which are the canary in the mineshaft, with 10 year Bond around zero and the 10 year Japanese bond negative!
Posted on 11 Jun
Collinson FX Market Commentary - June 10 - Kiwi in hot pursuit of AUD
The RBNZ left rates unchanged with an ease bias remaining. The KIWI surged on the news, to record highs for the year The NZD jumped a big figure on the news, to trade 0.7130, consolidating in global markets overnight. There were gains against most of the cross rates, while the AUD managed to trade 0.7440, only incremental higher.
Posted on 11 Jun
Collinson FX Market Commentary - June 9 - Kiwi chasing down AUD
The AUD pushed up to 0.7470, while the NZD broke above the big, big figure of 0.7000! The KIWI moved north despite weaker local manufacturing data and ahead of the RBNZ rate decision. The Central Bank will be sorely tempted to combat the rising currency with rate cuts, but will probably rely on rhetoric and the forlorn hope of a US rate hike.
Posted on 10 Jun
Collinson FX Market Commentary - June 8 - Antipodean storm surge
The NZD has also been dragged along by antipodean confidence, moving to 0.6950, encouraged by a falling reserve. The RBA left rates unchanged, despite temptation, with a neutral bias. The surging currency, rising to 0.7450, is being put in the hands of a Fed rate rise. The NZD has also been dragged along by antipodean confidence, moving to 0.6950, encouraged by a falling reserve.
Posted on 8 Jun
Collinson FX Market Commentary - June 4 - Low jobs cripples USD
AUD spiked to 0.7360, while the NZD hit 0.6950! Non Farm Payroll added 38,000 jobs, which is the worst in more than 5 years, but the Unemployment number fell to 4.7%!? The commodity currencies took full advantage of the crippled Dollar, with the AUD spiking to 0.7360, while the NZD hit 0.6950!
Posted on 6 Jun
Collinson FX Market Commentary - June 2 - AUD give up gains
The AUD gave up much of the previous days gains, falling to 0.7220, after falling Retail Sales contradicted GDP numbers The AUD gave up much of the previous days gains, falling to 0.7220, after falling Retail Sales contradicted GDP numbers. The NZD tested 0.6800, on the downside, hit by negative sentiment rather than any economic event. All eyes remain on the Non Farm Payrolls in the US tonight.
Posted on 2 Jun