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Collinson FX Market Commentary- July 15, 2014 - Rising interest hits

by Collinson FX on 15 Jul 2014
Start - Safety at Sea, SSANZ Two Handed Triple Series, July 12, 2014 © Richard Gladwell www.richardgladwell.com
Collinson FX market Commentary: July 15, 2014

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A relief rally in equities spread across Europe and through to the US. ECB President, Draghi, re-assured markets that the Central Bank 'stands ready to take further action as needed'. This allayed fears, rising across the banking sector, of another Portuguese default triggering yet another banking crises. Markets will look at the Bank of Japan, expected to hold the status quo, and at the Fed later in the week.

Central Banks are most definitely in control of markets with unprecedented expansionary monetary policies. The US took comfort from the ECB and rallied on some stronger than expected corporate earnings lead by Citibank. The Dollar rallied, pushing the GBP back below 1.7100, while the EUR held 1.3600.

NZ House Prices and Sales contracted feeling the full brunt of the RBNZ new loans policy and the rising interest rate strategy. The Housing Sector has lead the recovery of the Consumer and has now hit the wall.

The trade sector will be impacted by rising costs of capital and higher exchange rates. The KIWI continued to trade around 0.8800 supported by the interest rate differentials while the AUD remained just below 0.9400.

Australian markets await the impending repeal of the much despised 'Carbon Tax' which will drive lower costs through the economy and cost of living for the consumer.This will have a positive impact across the economy on economic growth.

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