Sunday January 13, 2013 - 23:15:39 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex - Morning Report
Morning Report Monday 14 January 2013
Markets were mixed during a listless Friday session, NZD underperformance perhaps the highlight. There was little news to buoy markets, the US trade balance and UK industrial production both disappointing. The S&P500 closed unchanged, following a -1.7% close in the Shanghai Composite. The CRB commodities index also closed unchanged, Brent crude oil down 1.1%, copper down1.5%, gold down 0.7%, and Tianjin iron ore down 2.1% (halting a 37% rally since 1 Dec). An above-consensus inflation report from China on Friday dampened expectations of future stimulus. US 10yr treasury yields fell from 1.93% to 1.85% during the NY session, helped by a narrowing US budget deficit in December.
The US dollar index (DXY) slipped by 0.2%. EUR outperformed amid bullish bets by global speculators, rising from 1.3250 to 1.3366 – a nine month high. USD/JPY nudged to a fresh 18-month high of 89.45, Friday’s announcement of a JPY 10.3tr stimulus causing only a minor blip. AUD continued to reverse from its 1.0599 Sydney session peak to 1.0531 near the NY close. Underperformer NZD similarly reversed from its domestic session peak of 0.8461 to 0.8363, possibly affected by the China data and profit-taking following a strong 3 weeks. AUD/NZD rose from 1.2550 to 1.2600.
US trade deficit widened by $6.6bn in Nov as imports rebounded 3.8%, outpacing a 1.0% exports gain. Both had fallen in October due in part to late month disruption from superstorm Sandy. The Nov imports bill was boosted by an 11% surge in consumer goods such as cell phones (iphone 5), and autos. Lower oil prices prevented a wider deficit.
UK industrial production rose 0.3% in Nov mainly due to a bounce in oil and gas but the factory output component fell 0.3%, its fourth month without a rise. The NIESR think tank now estimates that the economy may have shrunk by as much as 0.3% in Q4.
NZD and AUD outlook: The NZ calendar today has electronic spending and possibly REINZ housing data, all minor for markets. Australia data is also minor and includes housing finance and an inflation gauge. Fedspeak tonight from Bernanke and other doves should attract attention.
NZD/USD 1 day: This correction should find support around 0.8350 today.
NZD/USD 1 month: The positive trend since May remains intact, targeting 0.8470 and beyond. Below 0.8150 breaks the trend.
NZ 2yr swap yield 1 day: Opening today 2bp lower at 2.78%.
NZ 2yr swap yield 1 month: Breaking above 2.80% towards 3.00%, supported by improving NZ data.
AUD/USD 1 day: This correction should find support around 1.0500 today.
AUD/USD 1 month: Remains inside an 18-month consolidation triangle, awaiting a break higher.
Westpac Banking Corporation ABN 33 007 457 141 incorporated in Australia (NZ division). Information current as at 14 January 2013. 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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