Wednesday April 21, 2010 - 21:06:58 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex Research - Morning Report
Morning Report Thursday 21 April 2010
News and views
Negative sentiment pervaded equity, currency, credit and interest rate markets last night, but it was hard to find any events to attribute that to. There was an elevation in Greek chatter amid this week's IMF/EU rescue talks, stoked somewhat by the IMF's comment that contagion beyond Greece was a risk. Indeed, Portuguese government bonds rose around 10bp in yield, and the Greece-Germany 10yr spread rose to a fresh record high of 522bp. Note that agency EuroStat will today release the first assessment of Greece's finances by an outsider since the crisis began. The S&P500 is down 0.3%. Commodities outperformed other risk asset classes, the CRB index up 0.4%. US 10yr treasuries shed 6bp on the negative-risk sentiment, but 2yr notes are unchanged and 3mth Libor rose 0.6bp, suggesting either a funding or Fed-expectation dynamic at work.
The US dollar is slightly firmer. EUR fell to 1.3360 in Europe before settling at 1.3400. GBP outperformed the majors, rising to 1.5440 after the BoE's more positive outlook and a reported fall in unemployment. USD/JPY ranged sideways between 93.00 and 93.40.
AUD underperformed the majors, falling from the 0.9338 Sydney high to 0.9260.
NZD fell from 0.7130 to 0.7076 but settled around 0.7100. AUD/NZD slipped from 1.3110 to 1.3055.
No US data to report.
IMF raises global growth forecast form 2010 from 3.9% in Jan to 4.2%. "But activity remains dependent on highly accommodative macroeconomic policies and is subject to downside risks as fiscal fragilities have come to the fore". The IMF also revised higher its 2009 estimate from -0.8% to -0.6%. Westpac's forecasts are -0.7% and 3.4% for 2009 and 2010 respectively.
Bank of England April on hold vote unanimous 9:0 again. The minutes saw clearer signs of economic recovery, despite persistent downside risks. There was some concern expressed about upside risks to inflation and upward drift in inflation expectations.
UK unemployment falls a sharp 33k in Mar, and Feb's fall was revised to a steeper 40k drop. This pulled the claimant count jobless rate down from 4.9% to 4.8%, although the separate household survey found unemployment rising from 7.8% to 8.0%. That survey also found a steeper 89k fall in jobs in the 3 months to Feb, compared to an average loss of 38k in the previous two quarters, so the report was mixed rather than universally encouraging.
Canadian wholesale sales fall 1.2% in Feb. This was the first decline in four months, led by weakness in auto and machinery sales. Annual sales growth of 8.5% yr remains solid, however.
AUD/USD and NZD/USD outlook next 24 hours: AUD support today is in the 0.9230-0.9250 area. NZD is likely to remain inside 0.7050 and 0.7150 for another day.
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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