Monday June 14, 2010 - 20:22:17 GMT
Share This Story
Westpac Institutional Bank - www.westpac.co.nz
Forex Blog - Morning Report (Westpac)
Morning Report Tuesday 15 June 2010
News and views
Global equities continued their week-long rebound, but were disturbed late in the NY session by news Moody's had downgraded Greece by four notches to Ba1, sub-investment grade, citing economic risks. Note that S&P already has Greece at a similar rating, and Moody's did say a debt restructuring can be avoided, leaving the outlook at stable. The S&P500 is currently up 0.1%, having been +1.3% an hour after the open. The VIX index (risk aversion barometer) has slipped further. Commodities surged, the CRB index up 1.6%, including oil +1.9% and copper +2.8%. US 10yr treasury yields returned to Asian closing levels after the Moody's news. Greek 10yr government bond yields rose 16bp, partly on earlier equities' strength, but 10yr Spain rose 22bp and made a fresh two year high. There was market chatter that Spain will be forced to tap the EU rescue package.
The US dollar index fell as risk sentiment improved. EUR rose from 1.2160 to 1.2300 before the Moody's news, falling back to 1.2210. USD/JPY was under pressure all evening, from 92.10 to 91.45.
AUD performed well after the NZ close, rising from 0.8550 to 0.8667 before following the EUR back to 0.8590.
NZD rose from 0.6930 to 0.7021, pulling back to 0.6960. AUD/NZD continued its directionless pattern, ranging between 1.2330 and 1.2390.
No US data to report.
Euroland industrial production rose 0.8% in April, broadly consistent with previously published national data, which included back to back gains in German IP in March-April but a small April fall in France.
The UK's newly created and independent Office for National Budget Responsibility published revised economic and fiscal forecasts, which will underpin the June 22 emergency budget to be delivered by Chancellor Osborne. The growth profile was lowered sharply from that forecast by the outgoing Labour Govt in March. However the deficit and debt forecasts out to 2015 were also lower, because the new figures are based on central tendency forecasting whereas the previous methodology was designed to add caution to the forecasts (i.e. they were based on the lower end of the growth forecast range). For example the growth forecast in 2010 was cut from 3.25% to 1.3% (much closer to Westpac on 0.7%) but the budget deficit for FY 2010-11 was cut from Labour's GBP163bn to GBP155bn.
Canada auto sales fell 4.7% in April, which along with the 4.2% drop in March has erased the sharp rebound in sales earlier in the year. StatCan gave guidance that the May figures would be roughly flat.
AUD/USD and NZD/USD outlook next 24 hours: Asian and European markets have yet to price the Moody's news, so that the risk is for a pullback in commodity currencies today. That would be consistent with their intraday overbought conditions. AUD could retreat to previous resistance at 0.8550. NZD would do likewise, correcting to previous resistance at 0.6900.
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.
Forex Trading News
Daily Forex Market News
Forex news reports can be found on the forex research
headlines page below. Here you will find real-time forex market news reports
provided by respected contributors of currency trading information. Daily forex
market news, weekly forex research and monthly forex news features can be found
Real-time forex market news reports and features providing
other currency trading information can be accessed by clicking on any of the
headlines below. At the top of the forex blog page you will find the latest
forex trading information. Scroll down the page if you are looking for less
recent currency trading information. Scroll to the bottom of fx blog headlines
and click on the link for past reports on forex. Currency world news reports
from previous years can be found on the left sidebar under "FX Archives."