Wednesday December 2, 2009 - 19:27:08 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex Research - Morning Report (Westpac)
Morning Report Thursday 3 December 2009
News and views
Markets were quiet last night. US equities opened strongly but faded quickly after a report from an equity analyst estimated JP Morgan could drop around $3 billion in revenue if regulatory changes mean more derivative trading is migrated to exchanges. The S&P500 is currently down 0.2%, financials down 0.9%. US data headlines looked weak, but fit the story of a healing in the labour markets. Oil is down 2.3% on increased inventories, but metals performed well, copper making a fresh 2009 high, and gold continued to impress with a record high of $1217. US treasuries are unchanged.
The US dollar spent the London session consolidating, and bounced slightly in NY. EUR moved in a narrow range of 1.5080 to 1.5100 for most of the evening, dipping to 1.5040 a few hours ago. GBP performed well, climbing to 1.6700 before settling at 1.6650, M&A talk and trade recommendations helping. USD/JPY was uneventful, stuck between 87.00 and 87.40.
AUD tried hard to grind higher, but couldn't quite reach 93.00 before a NY dip to the 92.50 area.
NZD moved sideways, just below 0.7300, before the NY sell-off took it to 0.72220. AUD/NZD returned to the top of the recent range, and is currently just above 1.2800.
US ADP private payrolls estimate fell 169k in November, a little larger than market forecasts but still pointing to the smallest jobs decline in over a year. The Challenger job survey also found that planned layoffs were down 72% on a year ago to be at their lowest level since the recession began.
The Fed's Beige book recorded a "modest" improvement in economic conditions in November. Many regions reported a pickup in consumer spending, particularly on used cars, and manufacturing was seen as steady or improving. The jobs market and commercial real estate were seen as ongoing points of weakness.
Eurozone PPI rose 0.2% in October, slightly ahead of expectations. Higher fuel prices and base effects lifted the annual inflation rate from -7.6% to -6.7%.
UK PMI construction rose from 46.2 to 47.0 in November. The index has stalled as these levels since July, and points to a slow ongoing contraction in the sector.
AUD/USD and NZD/USD outlook today: AUD is holding above post-March rising trend support, now at 0.9250, so the bullish trend remains intact. We expect today's retail sales report to be supportive. NZD's medium term outlook is inconclusive while it remains inside the 0.7080-0.75255 range. The US "Beige Book" (more formally called the "Summary of Commentary on Current Economic Conditions") is released shortly, containing anecdotal information from business contacts, economists, and others.
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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