Thursday September 16, 2010 - 21:25:10 GMT
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Reuters - www.reuters.com
Forex Research - Morning Report (Westpac)
Morning Report Friday 17 September 2010
News and views
Markets were fairly contained. US equities closed unchanged after spending much of the session modestly in the red. Fed-ex, the world's largest cargo carrier, disappointed analysts with its earnings forecast, and US economic data was a mixed bag. Commodities were flat overall, oil falling 2% on pipeline issues, but gold nudging to a fresh high. Shipping costs continued to turn lower. US 10yr treasury yields were 3bp higher at 2.75.
The US dollar index ranged sideways for little change on the day. EUR rose from 1.2980 to 1.3110.
AUD slipped from an offshore high of 0.9395 to 0.9335.
NZD drifted lower to 0.7220 following a down beat RBNZ.
US Philadelphia Fed index rises from -7.7 to -0.7 in Sep. The headline corrected for Aug's exaggerated fall, as we expected, although the detail was quite weak. Shipments slowed from -4.5 to -7.1 and orders from -7.1 to -8.1, but jobs went the other way, from -2.7 to 1.8.
US producer prices up 0.4% in Aug. A 7.5% jump in gasoline prices was the main upside driver, but food prices fell 0.3% and core prices were up just 0.1%, constrained by a 0.4% fall in auto prices.
US current account balance widened from $109bn to $123bn in Q2, the main driver being the wider trade deficit we already know about. In July, the TIC data showed stronger capital inflows into the US ($63.7bn total net long term flows) including an uptick in Chinese holdings of Treasuries after a few months of declining holdings. On a related point, Treasury Secretary Tim Geithner said he was considering ways to urge China to let the yuan rise faster.
US initial jobless claims fell 3k to 453k last week. Claims are now down 54k from their August peak but that decline may be overstated by a Labor day holiday distortion so expect some upwards reversal next week.
Japan's tertiary activity index rose by 1.6% in July against expectations for a 0.7% increase. The June outcome was revised up to +0.2%, from -0.1%. The index is 1.7% higher than a year ago.
Euroland trade deficit EUR0.2bn in July. That is the third deficit in a row after persistent surplus from early 2009 until April this year. Both imports and exports fell.
UK retail sales fell 0.5% in Aug and July was revised back from 1.1% to 0.8%. Aug's decline was broadbased across food, fuel, apparel and household goods and was the first decline since the VAT hike in Jan. One standout once again was non-store retailing which rose 1.6%, predominantly internet shopping. But the overall decline adds to the sense the UK economy is losing momentum again.
UK CBI industrial trends survey softer. The orders index fell from -14 to -17 in Sep, due to weaker exports, and the first decline in three months.
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