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Collinson FX Commentary: Jan 19 - NZD holds .73c

by Collinson FX 20 Jan 00:51 NZDT 13 January 2018

Collinson FX Commentary: Jan 19 - NZD holds .73c

US economic data did not fulfil expectations as housing data declined and the Philly Fed survey turned south. US Building Permits turned negative while House Sales contracted 8.2%! This does not confirm the economic narrative of a booming economy and took its toll on the bull market rally in equities. Corporate earnings are strong and look likely to move ahead further by the impetus of tax cuts.

The Yen broke back into the 110's, while the GBP approaches 1.3900. Chinese economic data was positive, with GDP growth (6.8%), while Retail Sales and Industrial Production met expectations. Demand is strong for commodities, and the associated currencies are feeling the love.

The NZD holds above 0.7300, while the AUD approaches 0.8000, despite a slight blip up in Unemployment. Employment data remains strong as participation in the workforce continues to improve. Economic data must confirm the global rally to substantiate the massive push in equities.

Collinson FX Commentary: Jan 18 - Shutdown prompts selldown

A late sell-off in the Dow, the previous day due to fears over a US Government shutdown, was reversed and consumed. US corporate earnings are filtering through to markets at record levels. This underlying strength of US companies support the rally in equity markets.

The Dollar has been a major victim of its own success. The ECB are now looking at concluding QE, following the US and Uk, supporting a rally in the currency. The EUR jumped to 1.2230, while the GBP held above 1.3800, as demand for US debt remains strong. Commodity currencies have been major beneficiaries of strong demand, with the AUD approachiñg 0.8000, while the NZD attempts to consolidate around 0.7300.

Central Banks are looking to get ahead of the curve which has resulted in some big moves. Commodity currencies need support from underlying economic data.

Collinson FX Commentary: Jan 17 - US economy booms

The Dow broke through 26,000, charging in the New Year, driven by a surge in confidence. The US economy is booming under the Trump administration and the Tax cuts have been anticipated and digested. Tax cuts allow much of the money, previously earmarked for the Government, to flow directly in to the pockets of tax payers.

Companies and workers will spend and invest, which is why the economy is surging. The USD consolidated after losing ground to all currencies. Bond yields have collapsed, as demand spikes, allowing the reserve to flounder. The EUR drifted to 1.2235, while the Yen moved back towards 111.00. U.K. CPI continued to reflect growth in the economy, pushing to 3%, while the GBP rallied around 1.3800. Commodity currencies have been major beneficiaries, due to the resurgent boom in the US and the weaker Dollar.

The AUD traded around 0.7950, while the NZD retraced from 0.7300, as the Dollar recovers.

Collinson FX Commentary: Jan 16 - Tax cuts light up US economy

The Dow surged more than 200 points, blasting through to new record highs, amidst an explosion of confidence. The economy is on fire, lit by the tax cuts, which will stimulate corporate earnings and consumers pockets. The massive injection has sparked consumer sentiment, which will be reflected in growth and demand. This has spread to manufacturing countries and commodities. The NZD now tests 0.7300, while the AUD broke above 0.7970, as the reserve retreats.

US bond demand gathered momentum, forcing the Dollar lower, despite burgeoning growth. The EUR jumped to 1.2270, while the GBP spiked above 1.3800, reflecting the Dollar. The Yen has been a major beneficiary, surging to 110.50, as the Bank of Japan cuts its bond buying program. The massive rally in equity markets is based on sentiment and needs affirmation from solid economic data.

Collinson FX Commentary: Jan 15 - Markets enjoy Purple Patch

US Equity Markets closed out the week at new record levels, once again, confirming a vivacious start to the new year. The US economy has been set alight by tax cuts, as confidence and demand surge, while corporate earnings are set to boom.

The flow-on effect has created a surge in demand in Asian manufacturing nations and for commodities. Chinese trade numbers spell out the story with healthy increases in both exports and imports. Commodity currencies have been major beneficiaries, as the AUD heads towards 0.7900, while the KIWI spikes above 0.7200!

The exuberant confidence permeating the US economy has stimulated demand for US bonds, forcing yields and the Dollar lower. The EUR has reflected this, jumping to 1.2130, while the Yen has rallied to 111.00. Markets are enjoying a purple patch so continuous economic performance and will need to reflect this.

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