Monday June 7, 2010 - 21:45:48 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex Research - Morning Report (Westpac)
Morning Report Tuesday 8 June 2010
News and views
Risk aversion lingered. US equities tried to rebound, but weakened late session, the S&P500 currently down 1.2%. Financials are 2.7% lower, news that Goldman Sachs was subpoenaed after allegedly failing to provide documents in a timely manner weighing. Earlier, the Eurostoxx 50 closed 0.9% lower, and most Asian markets were 2-3% lower. The CRB commodities index is unchanged, as is oil, but copper shed another 2.2% to a fresh post-October low on global growth concerns. Gold surged 1.9% towards its record high. US 10yr treasuries are 2bp lower. Markets noted a WSJ article by Fedwatcher Jon Hilsenrath opining the Fed would delay rate hikes due to the contagion of the European debt crisis. Among European 10yr government bonds, Germany made a fresh yield low of 2.54% (down 2bp), while Spain made a fresh 12 month high of 4.60% (up 7bp), reflecting continuing aversion to the peripherals.
The US dollar index was steady near its year high. EUR was initially supported by strong German factory data to 1.1980 but then slipped to 1.1920. USD/JPY ranged between 91.50 and 92.10, the yen the clear outperformer since Friday night.
AUD initially staged a corrective bounce from 0.8125 to 0.8216 but has fallen back over the past few hours to 0.8125.
NZD fell further to a fresh two week low of 0.6582. AUD/NZD bounced to 1.2380, currently at 1.2310.
German factory orders rose 2.8% in April, much stronger than expected - the market was looking for a correction after a 5.1% surge in March. Growth was split equally across domestic and export orders, indicating that it's not just a weak euro story.
Eurozone Sentix investor confidence rose from -6.4 to -4.1 in June. Better than expected, but only reclaiming less than half of the record drop seen in May.
AUD/USD and NZD/USD outlook next 24 hours: Risk aversion should keep a lid on AUD and NZD. AUD has critical Fibonacci support at 0.8110, but may breach that today. NZD has channel support around 0.6550-0.6600, and also looks vulnerable.
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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