Monday March 11, 2013 - 19:11:28 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex - Morning Report
Morning Report Tuesday 12 March 2013
Global market sentiment: With little fresh news to sway markets last night, sentiment remained upbeat. US equities shrugged off the weekend’s weak China data and extended the bull run with the Dow Jones making a fresh record high and the S&P500 up 0.2% (currently) to a fresh five-year high. The VIX barometer of risk aversion sank to a six-year low. Commodities were mixed, Brent oil down 0.7%, copper up 0.3%, gold up 0.1% and iron ore down 1.5%.
Interest rates: US 10yr treasury yields consolidated recent gains, ranging sideways between 2.04% and 2.06%. Eurozone peripherals were relatively quiet, although Italy’s 10yr yields closed up 4bp in the wake of last Friday’s country downgrade. Australian 3yr bond yields remained inside the previous day’s range, firming during the London afternoon from 2.96% to 3.01%.
Currencies: The US dollar consolidated recent gains by drifting sideways. EUR price action was dull until a NY morning spurt from 1.2988 to 1.3038, mimicking equities price action. USD/JPY rested between 96.00 and 96.36. AUD bounced from 1.0218 to 1.0276. Outperformer NZD bounced from 0.8192 to 0.8265. AUD/NZD slipped from 1.2480 to 1.2430.
No US data to report.
German exports rose 1.4% in Jan, following a 0.2% rise in Dec, the first back to back export monthly gains since Q1 last year. Imports bounced 3.3% in Jan after falling more than 5% in the last two months of 2012. More evidence to suggest the German economy will at least partially reverse its Q4 0.6% GDP slump. Separately, German labour costs growth was steady at 2.9% yr in Q4 last year, and down from 3.1% yr in Q4 2011.
French industrial production fell 1.2% in Jan, its fourth fall in five months (Dec’s –0.1% was revised to a 0.9% gain), for a –3.5% yr annual pace of decline (cf. Germany –1.3% yr). Manufacturing was even weaker, down 1.4% in Jan and –4.5% yr, with auto industry output down by a quarter in January compared to a year earlier. This result adds weight to the view that the French economy is back in recession, with Q4 GDP down 0.3% and Q1 likely to show a further contraction.
Event risk today: The calendars are quiet today. NZ may have REINZ housing data. Australia has business confidence.
NZD/USD 1 day: The rebound from 8 Mar should extend to at least 0.8295 today.
NZD/USD 1-3 month: The positive trend since May has been broken and we now target around 0.8100 during the month ahead. Our view of a fresh high later in 2013 remains intact though.
NZ 2yr swap yield 1 day: Opening today unchanged at 3.00%.
NZ 2yr swap yield 1-3 month: Following the current consolidation, which could yet extend lower to the 2.80%-2.90% area, a rise above 3.20% should ensue.
AUD/USD 1 day: The rebound from 4 Mar should extend to at least 1.0300 today.
AUD/USD 1-3 month: Remains inside an 18-month consolidation triangle, which should see it reach at least 1.0100 before an eventual break above 1.0600.
Westpac Banking Corporation ABN 33 007 457 141 incorporated in Australia (NZ division). Information current as at 12 March 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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