Sunday March 17, 2013 - 20:07:32 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex - Westpac Morning Report
Morning Report Monday 18 March 2013
Global market sentiment: Some disappointing US economic data dented risk appetite slightly. Markets ignored the more dated releases among a large batch, focussing on the March surveys of US consumer confidence and NY manufacturing activity both of which were sub-consensus. The S&P500 closed down 0.2%. US bank stress tests caused no harm to bank stocks (closed up 1.6%). Commodities were mixed, Brent oil +0.8%, copper -0.4%, and iron ore +1.3%. After markets closed the Eurozone announced a bailout plan for Cyprus which requires depositors to pay a tax of 6.75% - the imposition likely to further dent markets today.
Interest rates: US 10yr treasury yields fell from 2.05% to 1.99%, the 2-10y curve flattening from 178bp to 174bp. Australia’s 3yr bond yield fell from 3.13% to 3.06%, while the 10yr yield fell from 3.66% to 3.60% (respecting a trend since October).
Currencies: The US dollar index weakened in response to the disappointing US data. EUR rose from 1.3010 to 1.3107 and closed at 1.3076. It opened this morning much lower at 1.2930 in response to the Cyprus plan. USD/JPY fell from 96.25 to 95.10, and gapped lower to 94.00 this morning. AUD benefitted from USD weakness, rising from 1.0361 to 1.0414, but fell with the rest to 1.0351 this morning. NZD similarly rose from 0.8200 to 0.8281 but is down at 0.82339 this morning. AUD/NZD fell from 1.2650 to 1.2575.
US CPI up 0.7% in Feb, lifted by energy (5.4% gain was first since Oct last year, including a 9.1% gasoline price rise), although food prices rose just 0.1%. The 0.2% core rate was constrained by lower auto prices, airfares and apparel; medical and housing costs were up by a moderate 0.2%. The annual headline and core CPI gains were both higher in Feb at 2.0% yr.
US NY Fed factory index edged down from 10 to 9.2 in Mar, its second highest reading since the first half of last year (possibly reflected distorted seasonal factors). Orders. shipments and jobs all remained positive despite slipping about 5 pts each to 8, 8 and 3 respectively.
US industrial production rose 0.7% in Feb reflecting a broad-based 0.8% factory output rise (autos 3.6%, machinery 1.7%); utilities posted a 1.6% rise on top of their 4.9% weather-driven Jan surge.
US consumer sentiment fell from 77.6 to 71.8 in the preliminary March survey from the Uni of Michigan. The fall was pre-empted by the lower IBD-TIPP index last week, and was mostly driven by lower expectations.
US TIC data showed $111bn of net inflow into the US is Jan up from $22bn in Dec, although long term flows slowed from $64bn to $26bn.
Canadian existing home sales fell 2.1% in Feb, more than reversing Jan’s 1.3% gain and the seventh month out of the nine in the short history of this series not to show a gain.
Euroland core CPI steady at 103% yr in Feb, the equal lowest pace since mid 2011. The headline CPI was unrevised at 1.8% yr, its lowest since late 2010.
EU leaders shift focus to “structural” deficits, effectively allowing member states to run larger deficits for longer during periods of economic malaise - a significant development that effectively means a diminished insistence on austerity and could pave for the way for further fiscal transfers between eurozone countries.
Westpac Banking Corporation ABN 33 007 457 141 incorporated in Australia (NZ division). Information current as at 18 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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