Tuesday August 17, 2010 - 21:26:39 GMT
Share This Story
Westpac Institutional Bank - www.westpac.co.nz
Forex Research - Morning Report (Westpac)
Morning Report Wednesday 18 August 2010
News and views
Rebound in risk appetite. Investors took heart from a number of events to push Asian, European, and US equities higher. The S&P500 is currently up 1.7%, the VIX index of risk aversion falling 2ppt to a more stable 23.9 reading. Strong earnings guidance from Wal-Mart and Home Depot, BHP attempting a takeover of the worldâ€™s largest fertiliser producer, and Warren Buffet increasing his stake in Johnson and Johnson were all supportive. US industrial production beat estimates (although housing data was weaker), and government bond auctions in Spain and Ireland went well, also lifting global sentiment. Most commodities gained, copper notably +2.0% as inventories declined. US 3mth Libor ground 1bp lower to 0.352%. US 10yr treasury yields bounced 7bp to 2.63% on the better sentiment and profit-taking from an overbought state. As expected, the Fed bought $2.6b of treasuries with maturities between four and six years, to little effect against the sell-off.
The US dollar was slightly weaker. EUR mainly followed the lead of equities and the Spanish and Irish auctions, peaking at 1.2916 during the European morning and then consolidating below 1.2900. GBP diverged from the rest, falling from 1.5690 to 1.5550, the weaker CPI contributing. USD/JPY consolidated around 85.00.
AUD followed US equities higher throughout the offshore sessions, peaking at 0.9080 a few hours ago. NZD similarly peaked at 0.7150. AUD/NZD ranged sideways at its multi-week high of 1.2725.
US housing starts rise 1.7% in July. But the detail in the report was soft. A 33% bounce in multiple starts (reversing Juneâ€™s 33% fall) masked the third straight fall in single family starts, down 4% (and 23% over the latest three months). Since the end of the tax rebate for homebuyers in April, new single family house building has contracted by about a quarter on both these measures, although the downside momentum seems to be leveling off. US industrial production up 1.0% in July. The standout sector was autos, which posted a 9.9% gain but there may be a seasonality issue here which could reverse in August - even so manufacturing ex autos was up 0.6%. If the business surveys are right, upcoming IP data will be much softer. US producer prices up 0.2% in July. A 0.7% rise in food followed steep declines over the previous three months.
German ZEW economic sentiment falls from 21.2 to 14.0 in August. That tells us there is concern about the growth outlook. But those same 300 surveyed analysts are upbeat about the present: the current situation index soared 29.7 pts to 44.3 (about a third of responses were provided after the German GDP surprise was reported last week).
UK CPI 3.1% yr in July, down from 3.2% yr in June, with high street discounting a factor at play. Thatâ€™s still more than 1% above the 2% target, so BoE Governor King wrote his third open letter for the year reiterating that inflation would be high for a while but back close to or below target in the medium term.
AUD/USD and NZD/USD outlook next 24 hours: AUDâ€™s bounce from yesterday may have a little more energy, but should not exceed 0.9140. Minor support is around 0.9000. Similarly, NZD should run out of steam between 0.7150 and 0.7200.
.Westpac Banking Corporation ABN 33 007 457 141 incorporated in Australia (NZ division). Information current as at 13 August 2010. 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 Westpacâ€™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 registered in England as a branch (branch number BR000106) and is authorised and regulated by The Financial Services Authority. Westpac Europe Limited is a company registered in England (number 05660023) and is authorised and regulated by The Financial Services Authority. Â© 2010 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."