by Collinson FX
Collinson FX market Commentary: June 7, 2014
- Day 5, 2014 Toyota Optimist Championships, Manly SC
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Equities made every post a winner, surging to yet another record, all-time high! The petrol on the fire is the Central Bank activity which continue to fuel the out of control bonfire. Non-Farm Payrolls met expectations and employment is approaching something like normal, unless you consider participation, which would frighten even the brightest optimist. The US economy added 217,000 jobs and the 6.3%
Unemployment rate was static. Economic data confirms a slow recovery but the odd clanger hints at an underlying problem. Deficit and debt remain the achilles heel of the developed world with seemingly controlled deficits adding to the mountain of Western debt accumulating. Equity and Bond bubbles could burst and that would have a greater impact than the GFC because of the financial vulnerability of Europe and the USA.
European markets were stable and the single currency reflected this, trading 1.3650 while the GBP was 1.6800. This stability was shared to close the week out in Asia with the AUD trading 0.9340 and the KIWI around 0.8500. The new week will look at growth and the US Consumer.
Wheeler will reveal the complex RBNZ interest rate policy and the world will wonder at how he can follow the white rabbit through the keyhole into Wonderland! He is on the right track, if the rest of the world was not doing the opposite, as he continues down the tunnel to the alternate Universe.
Taeping - RNZYS Winter Series - May 24, 2014
Collinson FX market Commentary: June 6, 2014
Draghi delivers as promised overnight with the ECB launching a super round of monetary stimulus. Central Bank monetary expansionism hit new lows with the bank being the first to offer a negative deposit rate (-0.10%). The ECB promised further asset back purchases and targeted liquidity to the banks in an effort to stimulate lending to the wider economy.
The Bank cut growth forecasts for the year and raised targets for 2015. The lack of growth and the advent of deflation has spurred this radical reaction. The excess of Monetary Policy has reached new levels and shows the desperation of the dysfunctional single currency. Equity bubbles loved the news and stretched to new all-time record highs, while the EUR bounced from lows to 1.3650, on a 'buy the rumour.....' trade. US markets lapped up the stimulus and now look with confidence to tonight's Non-Farm Payroll.
Chinese Composite and Services PMI both jumped supporting commodity demand and aiding the AUD, which continued to climb, back to 0.9330. The KIWI reversed recent weakness, jumping to just under 0.8500, amidst the ECB fallout.
All eyes now turn to US Job numbers and this should settle the weeks direction. This is good news for equities, but once again, for all the wrong reasons!
RNZYS Club Marine Winter Series - May 24, 2014
Collinson FX market Commentary: June 5, 2014
Nervous equity markets tested record all-time highs, 'prairie-dogging'.The Australian market was set alight early in the trading day with GDP numbers beating expectations. The first quarter GDP came in at a stronger than expected, 1.1%, which translated to an annualised number of 3.5%!
This is strong growth and a boost for the ailing Government still pushing the unpopular budget. The AUD reacted by moving back towards the 0.9300 mark and swimming against the tide. The KIWI remains weak and stalled under the yoke of a repressive interest rate regime, imposed by a delusional Central Banker, who fails to understand the supply side of the equation.
The NZD drifted back to test the 0.8400 on the downside. European and US markets keenly await the much anticipated and telegraphed expansion of monetary policy. Services and Composite PMI measures fell in the Eurozone, steeling Draghi's resolve,and putting downward pressure on the single currency. The EUR dropped below 1.3600, while the GBP held ground, drawing a definite contrast and holding 1.6730. US markets are focused on the ECB decision with an eye on local employment data.
The ADP reported a fall in private sector jobs. Non-Government added 179.000 jobs with expectations for over 200,000. This did not auger well for the all-important Non-Farm Payrolls released tomorrow. The global economy is stuttering and any relapse into recession will be far more grave, as most developed nations are in much worse shape.
Since the GFC Western nations have employed Keynsian economics and extended deficits and accumulated mountains of debt which leaves them less able to fight further shocks. All eyes are now on the ECB and their attempt to stimulate a dysfunctional single market.
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