Thursday February 11, 2010 - 20:18:01 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex Blog - Morning Report
Morning Report Friday 12 February 2010
News and views
Risk sentiment rose as the EU pledged conditional support for Greece (although details would not be finalised until next week), and the IMF said it would offer support as necessary. The S&P500 is currently up 0.7%, with some divergence among sectors, transports +1.8% but banks -0.5%. Commodities are higher, most metals gaining 1-2%, copper's +4.7% the largest since August. Yesterday's Chinese data on loans and inflation was supportive of metals in particular, as was the US jobless claims report. The long end of the US treasuries curve (10yr to 30yr) rose 5bp in yield, the disappointing 30yr auction contributing. Notable was a drop in central bank appetite for these long-maturity bonds. Estonia had it's A- credit rating outlook revised from negative to stable by Standard and Poor's as its public finances stabilised.
The US dollar remains in its elevated consolidation zone around 80.00. EUR remained under pressure until late Europe, falling from 1.3800 to 1.3600, when the EU and IMF comments on Greece helped it back up 1.3680. USD/JPY softened slightly from around 90.00 to 89.60.
The AUD remained elevated after its large positive employment surprise, as well as the welcome Chinese data, ranging between 0.8850 and just above 0.8900, currently probing higher at 0.8910.
The NZD was taken along for the AUD ride, reaching 0.7013. AUD/NZD held its post-employment high, ranging between 1.2680 and 1.2720.
US initial jobless claims fall 43k to 440k. This fall took claims back to a "normal level" according to the Labor Dept, with the administrative backlog that dates back to the New Year now largely cleared. The result does not mean that the labour market improved dramatically last week (ending 6/2, the week prior to the payrolls survey for Feb); rather it means that the elevated level of claims in late Jan actually reflected greater than previously reported labour market weakness from late Dec and early Jan. Also, in the prior week, continuing claims dipped to a new cycle low, falling 79k to 4538k.
European leaders "agree a deal" to help Greece with its budget deficit and public debt problems but details of the agreement will not be finalised until EU finance leaders meet next week.
Canadian new house prices rose 0.4% in Dec, their sixth consecutive monthly gain after falling in late 2008 and the first half of 2009.
AUD/USD and NZD/USD outlook today: AUD now has good support at 0.8800, and should make further gains today. NZD is supported at 0.6960, but needs to convincingly clear above 0.7000 before it can follow AUD higher. NZ retail sales today may be the catalyst, market forecasts subject to large errors.
Westpac Banking Corporation ABN 33 007 457 141 incorporated in Australia (NZ division). Information current as at 12 February 2010. 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 Westpacâ€™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 registered in England as a branch (branch number BR000106) and is authorised and regulated by The Financial Services Authority. Westpac Europe Limited is a company registered in England (number 05660023) and is authorised and regulated by The Financial Services Authority. Â© 2010 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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