Collinson FX Market Commentary- February 19, 2014 - Aussie smelt-down

- 2014 Mahurangi Regatta - Classic Yachts January 25, 2014

Collinson FX market Commentary: February 18, 2014

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Markets were ateady again overnight digesting recent gains and growing economic confidence. US Markets re-opened after the Presidents Day holiday and did little. NAHB Home Price Index slipped back and the Empire State Manufacturing Index contracted, but data has largely been ignored, due to the harsh winter weather engulfing much of the US.

The important, ZEW Economic Sentiment Index in Germany, contracted as did the Eurozone Index. This was not in line with the recent stream of positive economic data and stalled the rise of the EUR, trading around 1.3750 with the GBP 1.6700.

The Australian Economy is experiencing a manufacturing crises, with Aluminium Smelters closing, following hot on the heels of the closure of all car manufacturers. The Government has a big job addressing the transition of these industries into a more competitive areas. The high currency and top-end cost of production has heavily impacted manufacturing. Aluminium is particularly sensitive to the Dollar and with a falling international market price the decision was inevitable..

The previous Government had extended production with financial support but the writing was on the wall. The AUD ignored the domestic bad news and traded 0.9040. The KIWI is trading below 0.8300, but recent strength could be undermined if global data does not shrug of the bad weather and start to improve.

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Collinson FX market Commentary: February 18, 2014

The 'rising tide is lifting all boats' with Global economic confidence on the rise. Earlier talk of a market correction from last years surge in equities was all but forgotten.

It appears emerging markets are recovering and Chinese trade has surged to boost demand for commodities. The AUD has regained 0.9000 and is looking to consolidate although the domestic economy is suffering hits from manufacturing contraction and exports under some pressure.

The KIWI has continued to build on the recovery, reflected in a rise in Retail Sales, rising from 0.2% to 1.2%. This has supported the KIWI which is traded around 0.8350. Confidence in Europe has been rising with GDP growth data confirming a slow improvement.

Italy look to promote their youngest leader and Bonds yields are rallying strongly. This appears to be broad recovery but has yet to be convincing with strong economic data support.

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