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Collinson FX Market Commentary- January 28, 2014 - AUD takes a hit

by Collinson FX on 28 Jan 2014
2014 Mahurangi Regatta - Classic Yachts January 25, 2014 © Richard Gladwell www.photosport.co.nz

Collinson FX market Commentary: January 28, 2014, 2013

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Equity markets opened the week vulnerable, after last weeks losses, stemming from fears over the emerging markets and the impact of tapering.

Capital has been pouring out of emerging markets and heading for the perceived strength of the US, which is anticipated to climb in value, as the Fed's tapering program swings into action. Chinese growth has been under pressure, which has impacted commodity prices, accentuated by the rising in the reserve currency.

This has hit the AUD hard, testing lows below 0.8700, although some consolidation is underway, at these levels. The KIWI has been impacted, but not to the extent of the AUD, as Agricultural prices have been fairly resilient.

The NZD has traded around 0.8200, with Auckland closed for Anniversay celebrations and the Australia Day holiday closing markets for the day. US Equities were still in decline with global fears spreading to investors and sentiment was not assisted by New Home Sales crashing a further 7%.

Expectations are high for some GDP growth in the UK and bucked the trend, rising to 1.6575, despite a flailing EUR, trading around 1.3675. The equity correction was always coming, due to the nature of the bubble, and QE tapering appears to be the trigger.

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