Monday August 13, 2012 - 21:42:03 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex - Westpac Morning Report
Morning Report Tuesday 14 August 2012
Cracks appear. The euphoria following the ECB’s stimulus proposals announced on 2 August has waned and is slowly being replaced by concerns regarding the timing of and detail behind the signalled stimulus. Helping confirm those concerns last night was news that a fresh lawsuit against the ESM bailout fund was filed in the German constitutional court, potentially delaying the use of the fund and in turn, ECB action. Also hurting sentiment was an increase in London Clearing House margins on Spanish and Italian bonds, plus a Handelsblatt report that Germany will veto EFSF payments to Greece if the country doesn’t comply with its fiscal obligations. The S&P500 fell 0.7% on the above but recovered in NY to be -0.2% currently. Commodities were weaker, the CRB index down -0.9% and copper -1.2% but Brent oil up 0.6%. US 10yr treasury yields were confined to a sideways 1.62%-1.67% range.
The US dollar index (DXY) is little changed. EUR initially rose from 1.2275 to 1.2373 but sagged in NY to 1.2325. USD/JPY continued to consolidate between 78.16 and 78.37. AUD followed the equities slump from 1.0574 to 1.0497 and settled in NY to 1.0520. NZD fell from 0.8128 to 0.8077 before settling to 0.8090. AUD/NZD was directionless between 1.2995 and 1.3015.
No major US/European data to report.
Greek GDP contracts at –6.2% yr annual pace in Q2. While still painting a devastatingly weak picture, the pace of meltdown of the Greek economy was not quite as steep as the few economists who try to forecast the data expected; Q2 saw the economy shrink at the second slowest annual pace in nearly two years. But with the Statistics office short staffed and no longer publishing seasonally adjusted data, the precise numbers are not the issue, it’s that the economy has not posted material economic growth since 2007. Austerity fiscal measures and the uncertainties about euro membership, the ongoing bailout, the banks and politics show no real sign of diminished crushing pressure on the economy and the Greek people.
AUD and NZD Outlook: Momentum is turning downwards. Today’s domestic calendars are busier, Australian vehicle sales and business confidence not usually market movers, but NZ real retail sales could hurt the NZD if it disappoints. Tonight’s European and US data will be watched.
NZD/USD 1 day: We favour a break of 0.8077, paving the way to 0.8000.
NZD/USD 1 month: 0.8000.
NZ 2yr swap yield 1 day: Opening today unchanged at 2.68%, following movement in AU overnight.
NZ 2yr swap yield 1 month: Lower towards 2.50% on weaker NZ data and a global policy hiatus.
AUD/USD 1 day: We favour a break below 1.0497, paving the way to 1.0450. Below the latter would have significant bearish implications for the weeks ahead.
AUD/USD 1 month: 1.0500.
Westpac Banking Corporation ABN 33 007 457 141 incorporated in Australia (NZ division). Information current as at 14 August 2012. 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 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. © 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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