Friday October 2, 2009 - 00:54:58 GMT
Share This Story
Westpac Institutional Bank - www.westpac.co.nz
Forex Research - Morning Report
Morning Report Friday 2 October 2009
News and views
Risk markets took a hit last night on the back of two negative US data surprises. First up, jobless claims rose more than expected, although the trend improvement remains intact, so the jolt was minor. The later ISM manufacturing report did more damage, showing the important new orders/inventories ratio (a favoured lead indicator for production) tumbled sharply. Further, Westpacâ€™s US surprise index is at risk of breaking lower, pointing to risk aversion ahead. The S&P500 fell from the opening bell, down 2.1% as we write, and is below the key technical level of 1040. Oil was stable but copper fell 2.9%, the consensus missing Chinese PMI from yesterday also telling. US 10yr notes lost 11bp in yield, breaking below key 3.27%, and the 2-10 curve flattened 6bp.
The US dollar bounced to the top of this weekâ€™s range on the eveningâ€™s negative risk sentiment. EUR fell to major support at 1.4520. GBP was unscathed, having been pummelled for two weeks already, and held around 1.5950. The yen was also stable, ranging between 89.40 and 90.20.
AUD reversed all of the previous dayâ€™s breakout, which can now be labelled false; the Sydney close marked the evening high at 0.8833, the slide still in progress as we write at 0.8694.
NZD followed the pullback after peaking at 0.7243 pre-data, and is now at 0.7148. AUD/
NZD pulled back to 1.2160.
US ISM factory slips from 52.9 to 52.6 in Sep, its first â€śslippageâ€ť in nine months, while still indicative of a newly expanding industrial sector. The lower headline reading reflected losses of over 4 pts for both orders and production (though at near 56 and 61 respectively these are by no means weak) and a slightly steeper pace of decline in jobs; offset by less inventory rundown and increased supplier delivery times.
US construction spending rose 0.8% in August, but this followed steep downward revisions to June and July data. Meanwhile, pending sales of existing homes posted their seventh consecutive monthly gain, and the 6.4% rise was the second strongest of that sequence.
US personal spending jumped 1.3% in Aug thanks in large part to a 5.3% jump in durables spending, mostly autos due to the now expired â€ścash for clunkersâ€ť scheme. The report showed another soft core PCE deflator, with the annual rate drifting down to 1.3% yr in Aug, now lower than at any time during the 2003 deflation scare.
US initial jobless claims jumped 17k to 551k after falling in each of the prior three weeks, but the trend remains downwards. Another report showed corporate layoff announcements fell to 66.4k in September from 76.4k in August. Tonightâ€™s payrolls report for September will provide more guidance.
Fedspeak: Chairman Bernanke said that protecting consumers of financial services is â€śvitally importantâ€ť and dropped previous insistence that the Fed be responsible for that protection.
German retail sales fell 1.5% in August, their sixth monthly decline out of eight months so far in 2009. Annual retail growth slipped from â€“0.8% yr to â€“2.6% yr
UK factory PMI slipped to 49.5 in September. This points more to industrial sector stabilisation rather than growth. The Bank of Englandâ€™s credit conditions survey for Q3 found, based on lender responses, â€śsome increase in overall credit availability expected over the next three monthsâ€ť, with corporates rather than households the main beneficiaries.
AUD/USD and NZD/USD outlook today: The abrupt reversal in price action last night, as well as clues from US new orders/inventories and Westpacâ€™s US surprise index, warns of a larger correction. Accordingly, we watch for any breaks below 0.8670 and 0.7140 signalling further bearish behaviour.
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.
Forex Trading News
Daily Forex Market News
Forex news reports can be found on the forex research
headlines page below. Here you will find real-time forex market news reports
provided by respected contributors of currency trading information. Daily forex
market news, weekly forex research and monthly forex news features can be found
Real-time forex market news reports and features providing
other currency trading information can be accessed by clicking on any of the
headlines below. At the top of the forex blog page you will find the latest
forex trading information. Scroll down the page if you are looking for less
recent currency trading information. Scroll to the bottom of fx blog headlines
and click on the link for past reports on forex. Currency world news reports
from previous years can be found on the left sidebar under "FX Archives."