Collinson FX Market Commentary - Aug 2- Tasman dollars dip
by Collinson FX on 2 Aug 2016
- RNZYS Winter Series, July 16, 2016 Richard Gladwell
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Collinson FX Market Commentary - Aug 2 - Tasman dollars dip
Aug 2 - European markets were underwhelmed by the Manufacturing PMI data, which was neutral, showing little in the way of progress. Oil is now testing $40/barrel, a reflection of global demand, hitting energy companies and associated economies.
US ISM Manufacturing was lower, in line with the hugely disappointing GDP number, confirming a global story. Chinese Manufacturing slipped below the all-important 50, which is the distinction between expansion and contraction, hitting commodity prices.
The AUD was directly impacted, falling to 0.7550, ahead of the RBA decision. Global QE would indicate further rate cuts are likely and the over valued currency warrants action. Failure to do so would see a spike. The RBNZ is set to release an inflation report, which should confirm benign growth, thus increasing the pressure for further rate cuts.
QE is flooding markets with cheap money and creating bubbles, while achieving little on the economic recovery front, which is reflected in global economies. It does drive the equity and bond bubble. The NZD slipped back to 0.7170 with local trans Tasman Central Bank commentary and Dairy Auction prices set to drive currency direction.
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