Monday January 14, 2013 - 19:14:56 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex - Morning Report
Morning Report Tuesday 15 January 2013
Markets remained cautious amid little news flow last night. Fedspeak dominated, moderate Lockhart saying QE4 is not without bound, and dove Williams countering any exit from the stimulus program is several years away given economic projections. The most important speech is yet to come, Bernanke on monetary policy due in a few hours. The S&P500 is currently down 0.3%, tech bellwether Apple falling 3.3%. Commodities were subdued, Brent oil up 0.5%, copper down 0.5% and gold up 0.4%. US 10yr treasury yields fell from 1.88% to 1.83% but recovered in NY to 1.86%. Eurozone peripheral yields reversed higher, Spain’s 10yr up 14bp, Portugal +13bp and Italy +6bp.
The US dollar index (DXY) is little changed. EUR retreated from its 1.3404 Sydney session peak (11-month high) to 1.3336. USD/JPY also retreated from its earlier peak of 89.67 (fresh 18-month high) to 89.09. AUD pushed higher during the London morning to 1.0578 but then slipped with US equities to 1.0550. NZD similarly rose to 0.8431 before slipping to 0.8392. AUD/NZD bounced from 1.2540 to 1.2580.
Euro zone industrial production fell unexpectedly in November, contracting 0.3% over the month. This is the third decline in a row, making for a 3.7%yr decline. A 0.1% lift in Germany and 0.5% increase in France was outweighed by 1% and 2.5% declines in Italy and Spain, respectively. Sentiment in the euro zone has begun to turn up but it will be a while yet before activity in the EZ stabilises.
NZD and AUD outlook: Bernanke’s speech this morning (10am NZT) is the daily’s highlight, any support for Williams’ view on the longevity of QE4 likely to boost the currencies. The NZ data calendar has Q4’s business opinion survey, the inflation detail closely watched by the RBNZ. German GDP and US retail sales feature tonight.
NZD/USD 1 day: This minor correction persists and should find support around 0.8350.
NZD/USD 1 month: The positive trend since May remains intact, targeting 0.8470 and beyond.
NZ 2yr swap yield 1 day: Opening today 1bp lower at 2.79%.
NZ 2yr swap yield 1 month: Breaking above 2.80% towards 3.00%, supported by improving NZ data.
AUD/USD 1 day: This minor correction persists and should find support around 1.0500.
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 15 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
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