Monday September 20, 2010 - 20:27:28 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex Research - Morning Report (Westpac)
Morning Report Tuesday 21 September 2010
News and views
US equities broke higher on little news. The S&P500 is currently up 1.6%, investors taking more notice of a positive earnings surprise from Lennar Corporation (third largest US homebuilder) than a downbeat homebuilders confidence report to send the homebuilders' sub-index 4.9% higher. Commodities overall didn't follow suit, the CRB index unchanged and unable to breach a major resistance level. Oil bounced 1.6%, but copper fell 0.4%, and shipping cost indices continued to decline. US 10yr treasury yields fell 3bp to 2.71% on further positioning ahead of the FOMC meeting tonight, discussion of fresh QE expected by some. European credit concerns kept the pressure on Portugese and Irish government bonds, the 10yr yields rising 31bp and 19bp, respectively, to decade highs.
The US dollar index changed little. EUR fell during the morning from 1.3120 to 1.3030, recovering to 1.3060-1.3100. GBP underperformed, falling from 1.5683 to 1.5538, following weak housing data and news a UK private equity company was targeting a Swiss acquisition worth CHF3.3bn. USD/JPY firmed modestly, but couldn't break above 85.80.
AUD outperformed following RBA Stevens' hawkish speech yesterday and continued the domestic session rally to 0.9495 before taking a breath. RBA-watcher McCrann wrote an October hike was more likely than not.
NZD had only modest traction to 0.7320, spending most of he time below 0.7300. AUD/NZD accordingly made a fresh five-month high of 1.3008.
US NAHB homebuilders' sentiment index remained at an 18-month low of 13 in September. Housing market activity remains depressed in the wake of the expiry of the home buyers' tax credit in April.
UK house prices fall 1.1% in Sep, according to the Rightmove asking price index. That's the third decline a row, the first time we have seen that on this measure since late 2008/early 2009. Annual price growth slowed from 4.3% yr to 2.6% yr. Other data showed major bank mortgage approvals easing from 47k in July to 45k in Aug, their lowest since April last year. Completing the trio of soft data releases, M4 money supply growth slowed to 1.8% yr in Aug, its lowest on record.
Canadian wholesale sales fell 0.1% in July, the fourth month running without a gain, which is the weakest string of outcomes since early 2009. The auto sector was behind the latest fall.
AUD/USD and NZD/USD outlook next 24 hours: AUD's break above 0.9470 during NY opens the way to the 2008 high of 0.9850 over the medium term. Today, though, some consolidation down to 0.9420 is more likely. The RBA minutes this afternoon will be combed for timing clues. NZD is likely to test 0.7330 today.
.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.
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