Collinson FX Market Commentary- August 6, 2014 - Jawboning hits NZD

V5 and Mayhem - RNZYS Winter Series, August 2, 2014
Collinson FX market Commentary: August 6, 2014

http://itunes.apple.com/app/collinsonfx/id533360650?mt=8!Click_here to find out how to get CollinsonFX's free iPhone app

The Dow was hammered again overnight with some insipid economic reports from Europe and the US and growing fears surrounding a Russian invasion of the Eastern Ukraine. Composite PMI from China, Europe and the USA contracted overnight reflecting the lethargy in the global economy.

The big fear is that the Fed will stop the avalanche of liquidity swamping markets and driving bubbles in equities and commodities. This has led to speculation that we may be seeing a major correction but Yellen is a dove and as such is likely to defer any action. Central bank activity has led to this situation, with banks enjoying huge advantages, while the populous suffer the destruction of wealth. The EUR continued on the well-worn path lower, trading 1.3370, while the GBP improved to 1.6875 with economic data bucking the European trend.

The RBA left rates unchanged, as expected, and continued the serious and conservative outlook on the economy. The AUD slipped back, with a strengthening reserve, trading around the 0.9300 mark. This contrasts the wonderland that the RBNZ live in, with premature rate hikes killing the economic rebound and providing the interest rate differentials that provide further incentive to drive the KIWI higher in the short term.

Jawboning hit the NZD, but the attractive interest rates will encourage further buying until the currency starts to impact the trade related economy and kills the recovery, thereby fulfilling the prophecy for all the wrong reasons. Flight to the USD sent the KIWI back to 0.8470 but Central Bank activity is the major driver of all currency moves.

TP52's V5 and Mayhem (AON) - RNZYS Winter Series, August 2, 2014

Collinson FX market Commentary: August 5, 2014

Equity markets rebounded from the worst falls in two years in the previous week. Buffeted by Geo-Political issues and ambushed by the default in Argentina and the European Banking crises relapsing.

The Portuguese Central bank announced a EUR$4.9 Billion bailout of Banco Espirito Santo, but it is hard to understand the state of the European Banking system, with this occurring six years after the GFC. The ECB has flooded the Banks with cheap money which can be reinvested, virtually risk free for years in high yielding bonds, giving the recipients a free kick!? Geo-Political issues subsided with the Israelis calling a temporary ceasefire and the Ukrainians asserting increasing control over the Eastern rebels.

The EUR remains weak, trading 1.3420, while the GBP rebounded to 1.6850 with further signs of economic recovery. The Fed may now be under pressure to raise rates after QE infinity is completed. It is this that has spooked equity markets with a threat to the endless avalanche of liquidity.

It seems unlikely, with the GDP number being an annualized number of 4%, while in reality is little better than the first quarter contraction.

Australian Retail Sales increased 0.6% and Job Ads rose 0.3%, supporting a consolidation of the currency, which traded just above .9300. The KIWI creeps slowly back above 0.8500 supported by attractive interest rate differentials.

For more on Collinson FX and market information see:
www.collinsonfx.com and www.collinsonwealthmanagement.com

Countries: | NZ: 0800 338 838 | AU: 1800 143 415 | NY: 1888 6257 833 | UK: 0800 0285 834 |


Disclaimer: The details expressed in this website and accompanying documents or transmissions are for information purposes only and are not intended as a solicitation for funds or a recommendation to trade. Collinson Forex Ltd accepts no liability whatsoever for any loss or damages suffered through any act or omission taken as a result of reading or interpreting any of the information contained or related to this site.
http://www.marinebusiness-world.com/125275