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Collinson FX Market Commentary- March 12, 2014 - AUD and KIWI closer

by Collinson FX on 12 Mar 2014
Int. A-Class Catamaran World Championship, Day 5, Takapuna NZ © Richard Gladwell www.richardgladwell.com

Collinson FX market Commentary: March 12, 2014

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Uncertainty remains the central theme globally, with the West trying to come to grips with the stable door, which has been shut for a while and the horse has not only bolted but is in the glue factory! There has been little news on the economic front and Geo-Political issues continue to dominate.

Equity markets are in record breaking territory and the Fed continues to re-evaluate the stated Monetary Policy. The recent economic slowdown has been attributed to the unusually bad winter weather, thus giving an excuse to the Fed, to stall tapering. Yellen will err to the dovish side of policy just as a cat falls on it's feet.

This may re-invigorate the equity rally despite the Geo-Political situation evolving.

Commodities continue to suffer as Chinese demand slips. The AUD broke below 0.9000 and the KIWI held 0.8450, with an early election called, banking on the 'rock-star economy' preserving the status quo. European market continue suffer the uncertainty generated from the Ukraine and a solution is not in the wind. The EUR trades 1.3850 and the GBP 1.6625.


Economic data was thrown into the mix of uncertainty to begin the week. Chinese Exports fell 18.1% from a year ago, which shocked many, as most expected growth and thus demand to continue to strengthen. China and Asia continue to be a major driver of demand and the fall in Chinese demand hit commodity prices hard.

This in turn impacting a soaring AUD. After testing 0.9100 during the local days trade, the commodity driven currency, plunged back towards 0.9000. The KIWI did not have such a roller-coaster ride but did rise then settle back to 0.8450.

Uncertainty undermines markets and the Ukrainian crises has interrupted the bull market in equities. Russia will book the gains in the Crimea and now use a position of strength to influence Kiev, in terms of future political/economic direction, away from the EC. The West is considered an interloper in Russia's sphere of influence and is widely blamed for the current situation in the East.

The Malaysian Airline disappearance has also added to the jitters globally with terrorism suspected.

The EUR retreated back to 1.3870, but remains near highs, although the GBP retreated back to 1.6635. Look for more uncertainty in markets with global geo-political developments unfolding.

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