Thursday January 24, 2013 - 19:52:13 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex- Westpac Morning Report
Morning Report Friday 24 January 2013
Economic data was risk-supportive, benefitting some asset classes, although JPY, AUD and NZD currencies underperformed. Eurozone and German PMI’s beat consensus, signalling the pace of economic contraction may have slowed. The US PMI was also upbeat, leading indicators rose, and jobless claims fell. The S&P500 responded to the above plus the earlier China PMI improvement by rising 0.5% to a fresh five year high, although it has slipped during the last few hours to be +0.1%. US 10yr treasury yields also responded predictably, rising from 1.80% to 1.87%. An auction for 10yr inflation-linked bonds went well, forward-looking investors seeking inflation-protection. Among Eurozone peripherals, Portugal stood out with a 18bp rise in its 10yr yield following a weak 5yr auction.
The US dollar index (DXY) is little changed for the fourth consecutive day. EUR performed well following the PMI data, rising from 1.3286 to 1.3393. USD/JPY extended higher to 90.14 following the weak trade balance and PM Abe’s desire the BoJ boost inflation to 2% asap. AUD extended a domestic session decline from 1.0520 to 1.0451 – a three week low – with extreme long positioning and a late fall in Chinese equities cited. NZD similarly fell from 0.8446 to 0.8375, news a nitrate-leaching inhibitor had contaminated milk causing only temporary damage to the currency. AUD/NZD bounced from 1.2465 to 1.2510 on the news but later slumped back.
AUD and NZD Outlooks: There’s no major event risk scheduled in the local calendars today.
NZ 2yr swap yield 1 day: Opening today down unchanged at 2.80%.
NZ 2yr swap yield 1 month: Breaking above 2.80% towards 3.00%, supported by improving NZ data.
NZD/USD 1 day: A bearish outside down day warns of further weakness today towards 0.8335.
NZD/USD 1 month: The positive trend since May remains intact, targeting 0.8475 and beyond.
AUD/USD 1 day: Momentum is now pointing downwards, risking a further fall to 1.0400 support 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 24 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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