Collinson FX Market Commentary- February 4, 2014 - Up, Down, Hold

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Collinson FX market Commentary: February 4, 2014

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Nervous markets again sparked a sell-off with quick reaction to surprisingly weak ISM Manufacturing data. The huge gains in equities, over the course of the Feds QE programs, had to have an impact and saw an unprecedented rally in markets with the more than tripling of the Fed's balance sheet. Bernanke decided the economy was on the road to recovery and decided to begin tapering QE infinity.

This has caused a correction, by the order of 5%, enhanced by weaker economic data. The ISM Manufacturers survey was expected to be steady but fell from 56.5 to 51.3! This shocked markets and triggered yet another sell-off. The USD remained relatively steady, considered the ordination of the new Fed Chairman, Yellen. The EUR was steady with Manufacturing PMI holding up but the GBP gave up recent gains with a fall in Manufacturing. The EUR held 1.3500, but the GBP dropped over a big figure, to trade around 1.6300.

Chinese Non-Manufacturing PMI fell to 53.4 from 54.6, continuing recent reports, of a slow down in the worlds factory. The AUD remained steady, despite a fall in Building Approvals, which remain robust over the annualised numbers (up 21.8%).

The AUD traded 0.8775 and the KIWI managed to regain 0.8100, surprising many, in light of the fall in risk appetite. Economic data and central bank activity will continue to drive markets with the RBA in action early!

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