Collinson FX Market Commentary- August 27 2014 - US economy pumping

Optimist-Collinson 027 (1) - - 2014 Toyota Optimist Nationals, Manly
Collinson FX market Commentary: August 27, 2014

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US Economic data continued to support the growing confidence in the markets, with the S&P breaking above the '2000' for the first time. Durable Goods orders surged 22.6%, led by a boom in aircraft orders, while Consumer Confidence jumped the most seen in six years.

This follows promising recent data from the housing sector, supporting the Fed ending QE and considering interest rate rises sooner rather than later. The Dollar will be a long term beneficiary of the Fed Monetary Policy change. The EUR weakened further, to 1.3175, while the GBP traded 1.6550. NZ Trade data deteriorated with exports plunging while imports remained steady.

Commodity prices have not been great and the high interest rate policy, supporting the NZD, has not helped. This is severely denting the 'rock star' shine and raising questions over monetary policy.

The KIWI slipped after the news, dropping to 0.8330, while the AUD stubbornly held on to the 0.9300 big figure. Geo-Political developments remain the biggest threat to currency moves and Central Bank reaction to this and other economic events.

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Collinson FX market Commentary: August 26, 2014
The S&P topped 2000, for the very first time overnight, with equities eating up previous records. European markets surged awash with speculation that the ECB is about to embark on their own new QE program.

The additional Central Bank stimulus is due to the dire state of European economies but this will be a huge boost to banks and equities. Not so much the EUR, which will be further diluted, by the ever expanding balance sheet.

The EUR slipped back below 1.3200 while the GBP remained 1.6580. New Home Sales in the US contracted by 2.4%, contradicting recent data, although in line with the erratic economic data releases this year. QE in the US has been hugely controversial and success will be measured with the withdrawal from the massive expansionary policy.

The AUD battled to hold 0.9300 and remains at the whim of the big Dollar while the KIWI trades 0.8340. NZ Trade data will be released today and it is hard to see any improvements with the environment created by the only contractionary Central Bank in the OECD!

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