Collinson FX Market Commentary- January 10, 2014 - US misses data
by Collinson FX on 11 Jan 2014
Collinson FX market Commentary: January 10, 2014, 2013
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Auckland 18ft Skiff Championships - December 15, 2013 © Richard Gladwell www.photosport.co.nz
Non-Farm Payrolls missed predictions, by a wide margin, to end a poor week in equities. The US added 74,000 jobs, well below the 200,000 expected, but still managed to massage a fall in Unemployment. The Unemployment rate fell to 6.7%, as the participation rate dropped to a record low of 62.8%. Wall Street continued to live in an alternate universe, with the bad Jobs report, sparking speculation that tapering may be slowed.
Yellen does not need an excuse to continue expansionist monetary policy and this will directly undermine the value of the USD. She is a liberal democrat with all the corrupted Keynsian economic theories of Bernanke in spades!
Under pressure, the Dollar reacted predictably, with the KIWI testing 0.8300 and the AUD attacking the big, big figure of 0.9000! European markets closed before the fallout from NFP as the EUR pushed 1.3665 and the GBP 1.6480. Next week will be firmly focused on US Earnings and growth in the EC.
Collinson FX market Commentary: January 9, 2014, 2013
US markets conceded part of yesterdays gains, on equity markets, after the Fed minutes confirmed tapering in the QE infinity process. Economic news continues to improve with German Retail Sales and the Current Account moving into positive territory.
Employment continues to add gains while the engine-room of Europe beats strongly. German Factory Orders were up 6.8%, confirming the improvement in trade data. The US has also shown encouraging signs, with the ADP Jobs Report, adding 238,000 jobs in the private sector. The Dollar held ground, with the EUR 1.3550 and the GBP 1.6450 awaiting economic direction.
Recent strength should be reinforced this coming year assuming the Fed continues to taper. Doubts must surround this proposition with the appointment of Yellen.
The AUD and KIWI remain vulnerable, trading just under 0.8900 and 0.8240, respectively. Look for economic data in the US and the commencement of the earnings season with Alcoa reporting tonight.
Collinson FX market Commentary: January 8, 2014, 2013
Equity markets resumed their rally overnight, encouraged by economic data, and the confirmation of the new Fed Chairman, Yellen. She was confirmed by the Senate and this inspired markets to action, as the perception is that she is a Dove and will thus, extend Monetary Stimulus.
The Dollar should be on the rise if tapering were to end QE Infinity, but still doubts linger, with the EUR 1.3615 and the GBP 1.6410. The US Trade Balance contracted, as Oil imports dipped, with domestic production on the rise. Earnings begin Thursday, with Alcoa, and markets will react to the Fed minutes release tonight and the ADP Jobs report.
Huge economic data releases this week will influence markets but Central Bank actions and commentary will drive direction. Commodity currencies will remain vulnerable to USD recovery, with the AUD trading around 0.8900, and the KIWI below 0.8300.
Collinson FX market Commentary: January 7, 2014
Bernanke is on his bike and he is to be replaced by his vice-President, Yellen. Yellen is a dove and advocate of expansive monetary policy, which has dominated the socialist lead Obama regime. The complete fiscal ineptitude has virtually forced the expansive monetary policy.
By running deficits, the left consider, printing more money essential. The sheer ignorance of the socialist ideology astounds, as the belief that there will be no repercussions of printing more money, beggars belief. Political leaders have iterated the theory, that running deficits can be accommodated by expanding the money supply,must be considered verging on insane. The Feds balance sheet is now triple what it was pre-GFC! The goal is growth and ignore the long term consequences. Europe has adopted the same theories, extolled, by the very person assuming the role of Federal Reserve Chairman.
Tapering is a step in the right direction, but it is just a reduction in the expansion of the money supply! The obvious impact of printing money is the reduction in purchasing power and wealth. This is what the populus has been suffering, with real income falling aver the last six years, across the Western World. The Fed has undermined the Dollar, which has fallen to 1.3650 against the EURO and 1.6400 v the GBP.
A reduction in the expansionist policy should have a positive effect on the value of the USD over the next year and ultimately impact the commodity associated currencies. The AUD has fallen from heady highs, to trade just below 0.9000, but should experience further downside tests.
The KIWI has been resilient as the economy slowly recovers under the stewardship of a conservative Government. This could all be unravelled with election later in the year. Nine years of left-wing socialism, rainbow politics and associated economic policies, all but destroyed the economy and much work remains. The KIWI has began the year strongly, trading just under 0.8300, but will be under pressure from a recovering reserve currency.
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