Monday June 21, 2010 - 21:03:30 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex Blog - Morning Report (Trade the News)
Morning Report Tuesday 22 June 2010
News and views
Markets failed to advance the China-inspired risk rally past the Asian session. The S&P500 physical index gapped higher at the open, but this was simply reflecting its futures counterpart's earlier gains. Indeed, S&P500 futures peaked around the Sydney close, and started a retreat which has seen all the previous day's gains reversed. The index is currently down 0.6%, and the VIX barometer of risk aversion has risen slightly. Commodities in aggregate posted only modest gains, but copper is 1.6% higher on expectations a stronger Chinese currency will stimulate imports. US 10yr treasury yields reversed Asian session gains to be only 2bp higher at the time of writing.
The US dollar index did a u-turn with risk sentiment and is 0.4% higher on the day, forming a bullish key day reversal. EUR peaked at 1.2468 at the NZ close and declined to 1.2305 thereafter, also forming a (bearish) key day reversal. USD/JPY rose to 91.50 and reversed during Europe to 90.90.
AUD peaked at 0.8860 around the Sydney close, and then posted an orderly decline to 0.8760.
NZD fell from its overnight peak of 0.7153 to 0.7075. AUD/NZD was steady between 1.2355 and 1.2400.
Japanese all-industry activity index increased by 1.8% in April after declining by 0.7% in March (previously -0.8%). Over the year, the all-industry index is up 3.8% on gains in the tertiary and manufacturing sectors.
UK house prices rose 0.3% for June, lifting the annual rate of increase to 5.0% according to Rightmove. Note that this survey measures asking prices, which didn't fall as much as actual sale prices during the recession, and hence haven't rebounded as sharply.
AUD/USD and NZD/USD outlook next 24 hours: A more neutral backdrop for commodity currencies today means they are vulnerable to correcting their 14-day rallies. AUD should pull back to at least 0.8730 to cover yesterday's gap. NZD remains inside its multi-month channel, and we favour a pullback towards 0.7020.
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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