Please select your home edition
Edition
Collinson and Co

Collinson FX Market Commentary- February 12, 2014 - Market rally

by Collinson FX on 13 Feb 2014
Ranger - 2014 Mahurangi Regatta - Classic Yachts January 25, 2014 © Richard Gladwell www.photosport.co.nz

Collinson FX market Commentary: February 12, 2014

http://itunes.apple.com/app/collinsonfx/id533360650?mt=8!Click_here to find out how to get CollinsonFX's free iPhone app

Yellen held the line and was rewarded with a market rally despite the continuation of the tapering program. The 'steady as she goes' philosophy was welcomed by markets, as her dovish reputation may have tempted as delay, but did not. She testified that it would take a 'notable change in the outlook' for any change in the QE program.

The Dollar did not respond to the Chairman's endorsement with the EUR rising to 1.3650 and the GBP 1.6450. Commodities all booked gains as the reserve was dealt a further blow. Confidence in Yellens undertaking has not been endorsed by markets and commodity currencies reflected this as equities surged. Capital flows to assets with returns and thus the AUD surging through 0.9000 and the KIWI broke back above 0.8300.

Australia has been hit by the closure of the last major car maker,Toyota, but this was telegraphed long ago with the costs of manufacuring prohibitive. The local economy is rich in resources, which continue to supply a high standard of living, but a transition must be made in the manufacturing sector. House prices continued to rise, along with business confidence, with the closure relieving some distortion of capital flows.

Equity markets surged, but remain in bubble territory, which will test risk appetite.


Collinson FX market Commentary: February 11, 2014
Markets were in the 'calm before the storm' with the storm being Yellens first report on Monetary Policy tomorrow. Expectations are extremely high with her reputation as a 'dove' to be tested.

Tapering has been implemented and the economic recovery is, apparently, underway!? The last couple of Jobs reports have been very weak and the temptation must be there to suspend the tapering and reinstitiute full-blown QE Infinity.

The target Unemployment rate, presents a dilemma, as it continually falls to previous set target levels. The problem is that all signs point to a corruption in reality, due to the lowest unemployment participation rate, since Jimmy Carter. The Monetary Policy report will be the most important this year and a big determinant. Lack of commitment to tapering could bring an avalanche of USD selling and reinvigorate the equity rally.

Currencies remained steady ahead of Yellen, with the EUR trading around 1.3640 and the GBP 1.6400. NZ House prices remained strong but signs of a slowdown in the housing market continue to infiltrate.

The KIWI was steady at 0.8250 and the AUD was trending in the mid-0.89's. Direction will be determined from the US Fed's analysis and interpretation of economic progress and the actions to be taken.

For more on Collinson FX and market information see:
www.collinsonfx.com and www.collinsonwealthmanagement.com

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 - 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
Collinson FX Market Commentary - June 1 - AUD regains some mojo
The AUD regained some mojo, pushing back to 0.7225, after a jump in export data. The NZD surged towards 0.6750, after a jump in Building Permits, but little should be read into housing data. The Australian story is more positive but it is all relative! It is performing better than most other OECD countries, but has serious fiscal and monetary issues, due to political incompetence.
Posted on 2 Jun
Collinson FX Market Commentary - May 31 - All quiet on Memorial Day
Markets were quiet, as the US celebrated the Memorial Day holiday, taking a long weekend along with the UK. Commodity currencies traded in a range, with the NZD testing 0.6700, while the AUD failed to regain 0.7200. Further rate cuts by the RBA or RBNZ seem unlikely considering the pending threats to raise rates by the Fed. Central Banks remain the major driver of equity and currency markets, although economic data will influence daily moves, as will be seen for the remainder of the week.
Posted on 31 May
Collinson FX Market Commentary - May 28 - US to raise interest rates?
Yellen confirmed that it would 'probably be appropriate' to raise interest rates in the near future with a proviso! The Dollar did stage a recovery, as the EUR moved to 1.1110, while the JPY broke back to 110.30. The rise in the reserve was reflected in the commodity currencies, with the AUD falling below 0.7200, while the NZD tests 0.6700 to the downside. The coming week provides an avalanche of economic data which will probably provide cover for the Fed!
Posted on 30 May