Tuesday August 3, 2010 - 20:19:25 GMT
Share This Story
Westpac Institutional Bank - www.westpac.co.nz
Forex Research - Morning Report (Westpac)
Morning Report Wednesday 4 August 2010
News and views
US economic data (personal spending, factory orders, home sales) and earnings (Dow Chemical, Procter and Gamble) results presented mild disappointments to investors. The S&P500 is currently down 0.4%, a relatively modest reaction consolidating the past two days of gains. Commodities overall are unchanged, oil (+1.5%) making a fresh 2 1/2 month high on falling supply and the weaker dollar, but copper down 1.0%. US 3mth Libor shed another bp to 0.435%. US 10yr treasury yields fell 6bp after digesting the US data as well as media reports speculating on Fed quantitative easing should Friday's payrolls data prove weak.
Currency markets were mixed, recording modest changes. The US dollar index fell around 0.7% in Europe making a fresh 3-month low around 80.50 and is starting to look oversold. EUR did the inverse, its 1.3262 Europe-session peak last seen on 3 May. The yen outperformed all the majors, USD/JPY falling from 86.50 to 85.68, a post-November low.
AUD recovered from its weak Sydney close and shrugged off a minor dip around the US data to make a fresh recent peak at 0.9150. The AFR's RBA watcher Alan Mitchell opined a September hike is possible if employment and growth data permit.
NZD firmed slightly to a week high of 0.7356, despite the weaker monthly Fonterra dairy product auction. AUD/NZD held above 1.2400.
US core PCE deflator flat in June and May revised from 0.2% to 0.1%. However prior back revisions were to the upside so the annual core PCE profile was revised up by around 0.2ppts earlier this year. On these new figures the annual core inflation rate eased from 1.5% to 1.4% yr in June.
US personal income and spending growth both stalled in June, the former weighed down by a fall in wages growth, the latter by falling retail sales. Annual revisions (already included in last week's quarterly GDP report) shaved back the spending profile relative to income so the savings rate was higher than previously reported, and 6.4% in June.
US pending home sales fell 2.6% in June, failing to bounce at all from May's 30% plunge which followed the expiry of the tax credit for homebuyers. Also US factory orders were down 1.2% in June, confirming the soft report on the durables component already released late last month. All these June reports indicate that the economy was losing momentum across many sectors late in Q2; there is now informed media speculation that the Fed will acknowledge this by restarting its bond purchase program after next week's FOMC meeting.
Euroland producer prices rose 0.3% for a 3.0% yr annual pace in June.
UK construction PMI fell 4.3 pts to 54.1 in July, a relatively steep drop that adds to the sense the UK economy might see moderating growth in Q3 relative to Q2.
AUD/USD and NZD/USD outlook next 24 hours: AUD should hold above 0.9070 support again today, but fresh gains above 0.9150 look tough. NZD support today is at 0.7300, with any gains unlikely to breach 0.7400.
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."