Sunday July 5, 2009 - 20:54:35 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex Research - Morning Report
Morning Report 5 July 2009
News and views
The US holiday on Friday made for a quiet London session, currencies trading in narrow ranges. The overall tone remained mildly bearish risk, Eurostoxx futures sitting just above recent lows. Brent crude oil fell 1%, and made a post-23 June low. London copper futures also registered a loss, of 1.1%.
The US dollar was only 0.4% firmer over the Friday session, with little news to provide direction. India joined the body of opinion on dollar valuation and its place in reserves, and Canada's finance minister Flaherty expected the issues to be discussed at next week's G8 meeting, with no noticeable market effect. EUR weakened slightly to around 1.3965, the weaker Eurozone retail sales only coinciding with the move. GBP lost a cent, and spent most of the session stuck at 1.6330. USD/JPY hardly budged from 96.
AUD consolidated in a 0.7950 to 0.8000 range.
NZD slipped from 0.6350 to 0.6290, and is looking soggy. AUD/NZD peaked around 1.2685 and holds that level.
US holiday - no data to report.
Euroland retail sales down 0.4% in May. Weaker than expected, which along with downward revisions to history pulled the annual sales pace down to -3.3% yr, the second weakest on record. On a positive note, the slippage in the June services PMI was revised from 0.3 pts to 0.1pts, the final reading being 44.7 compared to 44.5 in the advance report (but 44.8 in May).
UK services PMI 51.6 in June. Slight slippage from 51.7 in May but still indicate of a second month of expansion in the services sector. Separately, the BoE reported mortgage equity withdrawal of -GBP8.1bn (i.e. a substantial equity injection). There have now been four quarters when the UK household sector has not accessed housing wealth to fund other spending in this way.
Our multi-month bearish NZD view remains intact. Resistance today should be at 0.6350, and the next targets to the downside are 0.6260 and 0.6150. Expect a low volatility day in the wake of the US holiday.
Westpac Banking Corporation ABN 33 007 457 141 incorporated in Australia (NZ division). Information current as at 14 November 2007. All customers please note that this information has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation or needs. Australian customers can obtain Westpac's financial services guide by calling +612 9284 8372, visiting www.westpac.com.au or visiting any Westpac Branch. The information may contain material provided directly by third parties, and while such material is published with permission, Westpac accepts no responsibility for the accuracy or completeness of any such material. Except where contrary to law, Westpac intends by this notice to exclude liability for the information. The information is subject to change without notice and Westpac is under no obligation to update the information or correct any inaccuracy which may become apparent at a later date. Westpac Banking Corporation is regulated for the conduct of investment business in the United Kingdom by the Financial Services Authority. Â© 2004 Westpac Banking Corporation. Past performance is not a reliable indicator of future performance. The forecasts given in this document are predictive in character. Whilst every effort has been taken to ensure that the assumptions on which the forecasts are based are reasonable, the forecasts may be affected by incorrect assumptions or by known or unknown risks and uncertainties. The ultimate outcomes may differ substantially from these forecasts.
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