Collinson FX Market Commentary - May 9

Collinson FX Market Commentary - May 9 - Aussies tax banks

by Collinson FX on 10 May 2017

Starling National Championships - Final Day - Wakatere Boating Club. April 18, 2017 Richard Gladwell www.photosport.co.nz

Collinson FX Market Commentary - May 9 - Aussies tax banks

May 9 - South Korea elected a left wing dove to the Presidency, which may calm a heated situation on the Korean peninsula, but only time will tell. European markets were calm after the predictable election of Macron, with the EUR slipping to 1.0870, while the GBP held 1.2940. German Trade continued to expand, increasing their massive trade surplus, enabled by the single currency.

The Australian budget was delivered and changed the focus from a reduction in spending to an expansion of revenue. This is a different approach to the goal of balancing the budget. This is a move away from the ideological 'smaller Government' to expanding tax revenues and avoiding electoral pain. The increase in taxes come from a levy on Banks, increases in the Medicare levy even further taxes on luxuries like tobacco.

This is an attempt to solve the fiscal problems without paying an electoral price and will impact. Massive infrastructure spending may stimulate the economy but increases the Government tax revenues will necessarily deprive the private sector and test real growth. The AUD has fallen back to 0.7340, while the NZD slipped below 0.6900, as the reserve recovers.

Starling National Championships - Final Day - Wakatere Boating Club. April 18, 2017 © Richard Gladwell www.photosport.co.nz

Collinson FX Market Commentary - May 8 - A President with no Party

May 8 - European markets drifted lower, following the election of the centrist, Macron. The reality of governing now becomes the question in France. Macron has no established political party, therefore no parliamentary party, to run Government. He has parliamentary elections to elect some legislators but will need to form alliances with both the established parties to rule effectively.

The EUR dropped to 1.0925, with more downside on the horizon, while the Yen hit 113.00! Australian Building Approvals plunged 13.4%, nearly 20% annualised, placing downward pressure on the currency. The Dollar posted gains pushing the AUD below 0.7400, while the NZD doggedly held on to 0.6900. Chinese trade data was strong supporting commodity demand while global growth and inflation will influence this weeks click here and here Or for the latest update click here

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