Thursday January 17, 2013 - 19:34:59 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex - Morning Report
Morning Report Friday 18 January 2013
The overnight session was buoyant. Helping sentiment was a set of US data surprises, notably jobless claims and housing starts (a disappointing Philadelphia manufacturing survey later had little market impact). There was also the IMF clearance of the next bailout tranches for Greece and Portugal, and the ECB’s monthly report reiterating its forecast the Eurozone economy would start to stabilise later this year. The S&P500 shook off 4 days of lethargy, up 0.6% currently (a fresh 5 year high). US 10yr treasury yields surged from 1.80% to 1.89%, the rise starting around the Sydney close. Eurozone yields were mixed, Spain’s 10yr up 11bp following a weak French bond auction but Greek and Portuguese yields lower on the IMF news.
The US dollar index (DXY) is slightly weaker. Outperformer EUR rose from 1.3270 to 1.3378 before consolidating during the NY morning. The yen underperformed following economics minister Amari’s reversal of his previous “yen too weak” comments, USD/JPY up from 88.14 to 89.89 – a 30 month high. AUD partly recovered from its employment data disappointment, rising from 1.0494 to 1.0550. NZD similarly bounced from 0.8382 to 0.8420. AUD/NZD ranged between 1.2510 and 1.2560.
The Philadelphia Fed manufacturing survey fell from 4.6 to -5.8 in Jan – another disappointing business survey early in the new year (a modest post-fiscal cliff lift had been expected), but higher than the Sandy-affected -8.9 in Nov. In the details new orders, shipments, and employment all fell.
US housing starts soundly exceeded expectations for a post-Sandy bounce, rising 12.1% to 954K. Housing permits rose a more modest 0.3% (market 0.4%) to a cycle-high 903K. These are more signs that US housing construction is trending up.
Initial jobless claims for the week ended 12 Jan fell 37K to 336K, well below the 365K expected and down from the 360K average in Dec. Claims appear to back on their cyclical downtrend after spiking following Hurricane Sandy.
AUD and NZD Outlooks: The local highlight today is NZ’s Q4 CPI release, Westpac economists estimating -0.1% quarterly change (vs +0.1% consensus). This afternoon sees releases of China’s GDP, industrial production, fixed investment and retail sales.
NZD/USD 1 day: Potential to push above 0.8425 towards 0.8460 as long as CPI doesn’t disappoint.
NZD/USD 1 month: The positive trend since May remains intact, targeting 0.8470 and beyond.
NZ 2yr swap yield 1 day: Opening today 4bp higher at 2.82%.
NZ 2yr swap yield 1 month: Breaking above 2.80% towards 3.00%, supported by improving NZ data.
AUD/USD 1 day: Slightly firmer to 1.0570 but remaining inside its 6 day range (1.05-1.06).
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 18 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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