Monday August 9, 2010 - 20:43:50 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex Research - Morning Report (Westpac)
Morning Report Tuesday 10 August 2010
News and views
In the absence of any material market news, US equities looked ahead to tomorrow's US central bank meeting where there is some speculation the Fed may announce some form additional monetary easing. The S&P500 is currently up 0.5%, grinding steadily higher after the open. Commodities were unchanged overall, the slip in foods balanced by gains in oil (+0.9%) and copper (+0.6%). Shipping costs posted further gains, large ships (Baltic Capesize) gaining 8.1%. US 3mth Libor shed another 0.7bp to 0.404%. US 2yr treasury yields rose 3bp, the 10yr unchanged.
The US dollar bounced off its four-month low of 80.09 to 80.74 (index terms), attempting to alleviate an oversold condition. A strong EZ investor confidence reading couldn't help the EUR which fell from 1.3308 to 1.3217. The day's underperformer was the CHF which weakened by 1.2% to 1.05. USD/JPY rose from 85.55 to 85.91.
AUD made an intraday peak at 0.9206 just after Sydney closed, slipping to 0.9154 during the European session and remaining thereabouts.
NZD peaked an hour earlier than the AUD at 0.7330 and slipped as far as 0.7667 before settling around 0.7290. AUD/NZD firmed to 1.2607 before settling 40 pips lower.
No US data to report.
The Japanese adjusted current account surplus widened to JPY1362.1bn in June, from JPY904.8bn in May. Exports fell by 0.6% in June, but a near 6% decline in imports led to an increase in the trade balance in the month. Investment income also rose in June.
The decline in Japanese bank lending moderated to -1.8%yr in July, from -2.0%yr in June. Lending by city banks is 3.7% lower over the year; lending by regional banks is unchanged from a year ago.
European Sentix investor confidence jumps 9.8 pts to 8.5 in August. That is the highest reading since late 2007 and indicates that optimism about the global growth story and the weaker euro's impact on exports has offset concerns about fiscal tightening across Europe, especially now that the bank balance sheet stress-testing uncertainty has been resolved.
AUD/USD and NZD/USD outlook next 24 hours: Significant event risk lies ahead from the FOMC meeting (early tomorrow morning NZT). Until then, the previous day's ranges remain largely intact - 0.9150 to 0.9210. NZD's boundaries are 0.7270 and 0.7360, a break below raising the odds a larger reversal has begun.
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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