Collinson FX Market Commentary - Feb 10 - NZD collapses on RBNZ stall

by Collinson FX on 10 Feb 2017

Steinlager 2 - Millenium Cup and Bay of Islands Sailing Week, January 2017 Steve Western www.kingfishercharters.co.nz

Collinson FX Market Commentary - Feb 10 - NZD collapses on RBNZ stall

Feb 10 - Trump reignited markets overnight! Trump met with airlines and promised a 'phenomenal tax announcement' in a few weeks. The power of the bully pulpit is front and centre in the US and Trump takes full advantage. Equities, currencies and bond yields all jumped on the Trump news. The EUR slipped back to 1.0650, while the Yen jumped to above 113.00, in reaction to a rising reserve.

The RBNZ left rates unchanged, in their latest Monetary statement, shifting the bias from easing to neutral. Many expected a more bullish approach to interest rates, but the Central Bank predicted no action until 2019. This did not gel with reality. The RBNZ have moved rates with little encouragement, in both directions, often incorrectly and certainly untimely. This reading of the monetary situation triggered a collapse in the NZD, which fell from above 0.7300, to trade 0.7175!

The RBA has been far more bullish and the AUD remained steady, trading around 0.7625, allowing a big adjustment in the cross rate. Central Bank action and Trump remain the major drivers across markets.

Steinlager 2 - Millennium Cup and Bay of Islands Sailing Week, January 2017 © Steve Western www.kingfishercharters.co.nz

Collinson FX Market Commentary - Feb 9 - Thankfully all quiet on US front

Feb 9 - A quiet night of trade on equity and currency markets with little economic data releases or action on the Trump front. Trump is still immersed in the immigration ban and pushing for his Cabinet approvals in the Senate. You can't keep a good man down for long so we can expect more fireworks to impact markets.

The Dollar was steady, with the EUR trading below 1.0700, while the Yen holds around 112.00. Japanese Current Account and Trade data was static, having little impact on associated currencies. The RBA left rates unchanged and expectations are similar for the RBNZ in election year.

RBNZ Governor Wheeler, is likely to take the opportunity to jawbone the currency lower, with little effect. The Fed's actions to tighten monetary policy will close interest rate differentials and perceived risk will drive rates up in NZ and Australia.

Steinlager 2 - Millennium Cup and Bay of Islands Sailing Week, January 2017 © Steve Western www.kingfishercharters.co.nz

Collinson FX Market Commentary - Feb 8 - No rates move from RBA

Feb 8 - Equities regained lost ground overnight, while the Dollar recovered more ground, with US markets looking closely at corporate earnings. The US trade deficit rose to another record high, which highlights one of the Trump administrations favourite issues, poor trade agreements allowing massive trade imbalances.

The EUR slipped below 1.0700, while the yen has nudged below 112.00, with Central Bank action and speculation again coming into play. The RBA left rates unchanged, as expected, leaving the interest rate differential the potential to close on Fed rate rises.

The AUD drifted lower to 0.7625, while the NZD consolidated above 0.7300, boosted by a strong inflation report. The NZ Dairy auction also booked marginal gains, allowing the currency some license, on the upside.

Collinson FX Market Commentary - Feb 7 - AUD depressed ahead of RBA

Equity markets were softer to open the week, with growing conflict in political circles in Europe, while Trump continues to throw the cat in with the pigeons! Nationalist French leader, LePen, launched her campaign with flourishing anti-EU and migrant rhetoric.

This sentiment is reflected also in poll for leading right winger Geert Wilders, in Holland. The threats to the single market are on the rise. German Factory orders surged 5.2%, emphasising the trade advantage German enjoys through currency manipulation, as outlined by Trump adviser Navarro. The EUR slipped back to 1.0740, while the GBP fell to 1.2450, as the British House Speaker publicly refused Trump permission to address Parliament.

The AUD traded around 0.7650, depressed after weak Retail numbers, ahead of the RBA rate decision. The Central Bank has left rates unchanged for months and no action is expected. The NZD tests 0.7300 and is likely to trade on reserve strength with some local Central Bank speculation to drive daily moves.

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