Sunday March 28, 2010 - 19:50:38 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex Research - Morning Report
Morning Report Monday 29 March 2010
News and views
US equities initially gained after EU leaders agreed on a safety net for Greece based on EU and IMF financing. However, gains were pared back after a report of a South Korean naval ship sinking raised geopolitical concerns. The S&P500 closed up 0.1%, from 0.7% earlier in the session. The CRB commodities basket closed 0.2% lower, oil's -0.7% possibly influenced by the downward US GDP revision, copper's +0.7% on lower inventories, and gold's 1.5% on Korean tensions. Whole milk powder was 1.4% higher on the week. US treasuries consolidated below last week's yield high, shedding 3bp during the session to 3.85%.
The US dollar slipped from the recent high to 81.55, largely due to EUR's rebound. EUR rose steadily on short-covering to 1.3425 after the Greece agreement, forming a bullish key reversal day. Stop-lossing at the NZ open this morning saw it gap to 1.3510. USD/JPY consolidated between 92.30 and 92.90.
AUD fell from Sydney's close at 0.9117 to 0.9000, before partly recovering late NY to 0.9040, and trading at 0.9050 at the NZ open.
NZD fell from 0.7090 to 0.7016, but has rebounded to 0.7050 this morning. AUD/NZD slipped further to 1.2820.
US GDP growth was revised down from 5.9% to 5.6% annualised in Q4. No particular component stood out as a major driver, it was just minor tweaks all round. Nevertheless since the advance release two months ago, the growth pace of the economy outside of inventories has been shaved back from 2.2% to 1.7% annualised, little improved from Q3's 1.5%.
US UoM consumer sentiment revised higher in March. The modest upward revision to UoM consumer sentiment from 72.5 to 73.6 leaves the index unchanged from February, now that all 500 respondents' surveys have been collated (vs 300 in the preliminary result).
UK business investment was revised a little higher in Q4 but was still down a steep -4.3% in the quarter and -23.5% yr, the sharpest drop in annual terms in records which stretch back to 1967.
AUD/USD and NZD/USD outlook next 24 hours: The positive sentiment around Greece and Korean concerns played down by officials should be supportive today. AUD should trade above 0.9000, NZD above 0.7000.
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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