Wednesday December 9, 2009 - 19:25:23 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex Research - Morning Report
Morning Report 10 December 2009
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In a consolidative evening, bereft of any major US news, the S&P500 settled near the bottom of its month-long range, and is currently down 0.2%. A mildly bearish pall remains, though, Spain (AAA) the latest casualty of the credit rating agencies, S&P placing it on negative outlook. The Eurostoxx index closed down 1.1%. Oil fell further, down 2.6% to just above $70, as did metals (copper -1.4%, gold -0.7%, silver -1.3%). US treasuries were sold after a weak 10yr auction, the notes 5bp higher in yield, the 2-10yr curve 4bp steeper. Foreign interest in the auction appeared to have slipped (in contrast to appetite for shorter-dated paper), and tomorrow's 30yr auction will be nervously watched.
The US dollar ran out of steam near its one-month high. EUR bounced slightly in London to around 1.4780, but pulled back to 1.4680 in NY. GBP also popped briefly, to 1.6375, but is back under 1.6200, breaking below the post-15 October range. UK Treasurer Darling announced a 50% tax on bankers' bonuses, raising concern about London's financial hub status. Despite a disappointing Japanese GDP revision yesterday, the yen rose against the dollar to 87.37, and was the outperformer among the majors.
AUD bounced after the Sydney close to 0.91114, but was dragged back after the Spain news to around 0.9030 currently.
NZD's bounce took it to just above 0.7140, but it's back around the key 0.7080 level. AUD/NZD showed signs it may be ready to correct the Oct-Nov rally, slipping from around 1.2800 to 1.2730.
US wholesale inventories rose 0.3% in October, ahead of market forecasts, and indicating a better than expected contribution to Q4 GDP growth. Wholesale sales rose 1.2% in October, and September was revised from a 0.7% to a 1.3% gain. Strength in petroleum and farm product sales will have largely been price-driven, but a 0.8% rise in durable goods sales suggests that there was some pickup in volumes as well.
Japanese Q3 GDP revised down sharply from the preliminary estimate. The Q3 number is now 0.3% (1.2%saar) from the original 1.3% (4.8%saar). Weaker capital spending (going from positive to negative) and a lower inventory accumulation than the statistician had assumed, pushed the result sharply lower.
UK visible trade deficit widened to GBP7.1bn in October. Exports rose by 4.7% and imports rose 4.1%, in both cases a reflection of the weaker pound over the month.
AUD/USD and NZD/USD outlook today: Both currencies continue to hover around key support levels. AUD is holding above 0.9020 for now, but risks pushing lower to 0.8950. NZD broke below 0.7080 yesterday but wasn't ready to follow through. It remains vulnerable to a push to 0.7025. The key event today is the RBNZ's Monetary Policy Statement, where soft language should remain.
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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