Thursday November 12, 2009 - 19:30:50 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex Research - Morning Report (Westpac)
Morning Report Friday 13 November 2009
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Risk appetite fell last night, ending an eight-day run higher. The decline was attributed to oil stockpiles growing, which in turn belted oil 2.8% lower, although that seems a convenient, rather than plausible explanation. A better-than-expected US jobless claims report was ignored. The S&P500 is down 0.7% at 1300 EST. Other commodities also suffered, silver down 2.1%, and gold 1.1% lower after making a new high. Both metals formed bearish outside day reversals. US 10yr treasuries were sold by 5bp from the NY open, affected by the poor performance of the 30yr auction, creeping inflation expectations pushing that average yield to 4.47 (compared to 4.42 expected).
The currency nobody wants put up good fight yesterday, the dollar index up 0.9% from the Sydney close. EUR fell to trendline support at 1.4853, industrial production missing estimates. USD/JPY rallied from 89.80 to 90.60. USD/CAD formed a bullish outside day reversal, rising to 1.0546.
AUD also formed an outside day reversal (bearish) after making a fresh 2009 high during the Sydney session at 0.9370, but then falling to 0.9340 by the Sydney close, and continuing down to 0.9215.
After hovering just above 0.74 yesterday in Wellington, the NZD fell to 0.7317, breaking below the post-March trendline. AUD/NZD gained during the risk aversion to 1.2646, slipping to 1.2600 during the last couple of hours.
US initial jobless claims fall 12k to 502k. That's the lowest reading since the start of this year, and along with a further 139k fall in continuing claims a week earlier, the picture of a steadily improving labour market remains very much intact. The improvement here is more marked than we have seen in the non-farm payrolls report recently, but the likelihood is that payrolls will eventually also reflect this latest downtrend in job losses.
Japanese corporate goods down 6.7%yr. Prices fell for the tenth month in a row (down 0.7%mth) with revisions dragging through the year declines to -6.7%yr vs expectations of -6%yr. Despite an export rebound and rising raw materials costs as commodity prices rebound, a glut of supply, very weak domestic demand and a strong yen are continuing to weigh heavily on prices.
Euroland industrial production up 0.3% in Sep. This was the fifth monthly gain in a row, but with consumer durables output down 6% it seems the positive impact from car scrappage schemes across the northern hemisphere may be waning.
Canadian new house prices jump 0.5% in Sep, the strongest monthly gain since early 2008, and yet another indicator of the uptrend in the Canadian housing market that has emerged recently, driven by low interest rates and a relatively healthy banking sector.
AUD/USD and NZD/USD outlook today: The negative risk sentiment as well as the abundance of outside day reversal signals formed last night caution against going long today. AUD should find intraday support at 0.9200, NZD around 0.7300.
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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