Monday November 9, 2009 - 19:20:05 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex Research - Morning Report
Morning Report Tuesday 10 November 2009
News and views
Global equity markets reacted to the weekend's G20 meeting which agreed to maintain stimulus efforts. US-based exporters, which have benefited from the cheaper dollar, outperformed, along with banks and financials, and the S&P500 is currently up 1.7%. Oil stood out among commodities, up 3.5%, partly due to a tropical storm in the Gulf of Mexico resulting in output cuts. Oil is yet to break above its three-week range. Gold maintained its uptrend to make a new high of $1111 (+0.8%), while copper was subdued (+0.4%). US 10yr treasuries rallied by 5bp after a solid 3yr auction, and the 2-10yr curve flattened similarly, perhaps correcting the post-October gains.
The US dollar weakened on better risk sentiment, as well as ongoing effects from the weekend's G20 meeting (it failed to comment on dollar weakness), and is down 1.2% since the London open. EUR rallied sharply to 1.5020, Trichet's comments that economic growth is a little better than expected checking the rise. The Dutch finance minister said EU states generally agreed 2011 is the best time to start exit strategies. USD/JPY saw little volatility around 90.00. CAD rallied sharply down to 1.0555, assisted by M&A talk around Microsoft and Canadian company Research In Motion.
AUD continued higher post-Sydney's 0.9244 to reach 0.9308. A McCrann article had little on monetary policy.
NZD continued higher on the Fonterra payout news, from 0.7373 at NZ's close to 0.7418. AUD/NZD did little, hovering above 1.2540 minor support.
The Fed Senior Loan Officer Survey found that fewer banks tightened lending standards in Q3. Banks reported lower demand for most loan types, aside from prime mortgages.
Euroland Sentix investor confidence rises from -12.6 to -7.0, the fourth consecutive gain. This was stronger than the consensus forecast for stalled confidence improvement, but the decent equity upswing seen in the last few days compares to softer stockmarkets in early November - down around 5% or so - and the survey was taken at the end of last week, whereas the forecasts for Sentix were made at the market's recent nadir.
German industrial production up 2.7% in September. A solid result, especially given that consumer durables orders fell (i.e. less autos boost from scrappage schemes) but capital goods orders were strong.
Canadian housing starts rose 5.4% in October, reversing the September drop to (just) reach the highest level so far this year. Single family house starts pulled back after two months of double-digit gains, while the volatile multiples component rose by 13.8%.
AUD/USD and NZD/USD outlook today: AUD today is again a 'buy-on-dips' proposition, as is NZD which has broken above trend resistance.
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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