Monday April 1, 2013 - 18:56:30 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex - Westpac Morning Report
Morning Report Tuesday 2 April 2013
Global market sentiment: The USD shed ground across the board last night after the March US ISM index disappointed expectations, coming in at 51.3 vs 54.0 expected. Over the weekend Cypriot authorities announced that uninsured depositors at the Bank of Cyprus could lose 60% while Italian President Napolitano announced the formation of a panel of experts to help break Italy’s political deadlock, but amid sleepy Easter Monday markets neither news item caused much of a ripple. US stocks kicked off the second quarter with a 0.3% decline. European markets were closed for Easter Monday.
Interest rates: The US 10yr treasury yield fell from a session high of 1.89% ahead of the ISM data to 1.83%.
Currencies: USD/JPY was the big mover overnight falling to 3 week lows at 93.30 after the weaker ISM data. EUR/USD rose to 3-day highs at 1.2869. AUD/USD recovered from sub-1.04 in Asia to 1.0430 in afternoon US trade while NZD/USD is trading at its session highs (0.8380/85) into the close.
US GDP growth revised up from 0.1% to 0.4% annualised in final Q4 report. Two months ago, this was reported as a –0.1%, so still very weak but no longer contractionary. The detail showed a further downward revision to personal consumption, offset by more business investment spending and less drag from exports, relative to the earlier estimate for the quarter.
US initial jobless claims rose 16k to 357k in the week ended March 23, the second rise in a row taking claims back into the upper half of the 330k-375k range for the year so far, indicating the job market might not be improving quite as much as the recent run of mostly solid payroll jobs gains has been suggesting.
US Chicago PMI slows from 56.8 to 52.4 in Mar, its lowest reading for the year so far and below even Westpac’s bottom of the range forecast, adding weight to the view that recent apparent strength in the index is more related to distorted seasonal factors than underlying activity gains. The detail showed production/orders down from 60 to 52/53 and employment easing from 56 to 55. Meanwhile the Kansas City Fed factory index, despite rising from –10 to –5 in Mar, recorded its weakest pair of readings since the US economy was in recession in mid 2009.
Canadian GDP grew 0.2% in Jan, reversing Dec’s 0.2% fall. Industrial product prices rose 1.4% in Feb, their fastest gain in almost five years, led by energy.
Euroland money supply M3 growth slowed from 3.5% yr to 3.1% yr in Feb, its slowest since Sep last year, and loans to the private sector continued to contract at a –0.9% yr pace.
German retail sales rose 0.4% in Feb on top of a 3.0% surge in Jan. Despite the first back to back monthly gains in a year, sales are still down 2.2% yr. Meanwhile, unemployment rose 13k in Mar, its largest rise since Oct, reversing Jan’s 13k fall (Feb was flat), further evidence of the slump in economic activity since the last quarter of 2012. The jobless rate was steady at 6.9% for the sixth month running.
UK consumer confidence was steady at –26 in Mar according to GfK. The Nationwide reported house prices up 0.8% yr in Mar, their fastest pace of gain since early last year.
Event risk today: NZ has Q1 employment confidence data, the RBA meets in Australia. We expect the RBA to retain the, “scope to cut”, commentary. The Australian calendar includes the March AIG PMI and RP Data-Rismark home prices. US data tonight include Feb factory goods orders, March auto sales and the March IBD-TIPP economic optimism index. Plenty of Fedspeak is on tap this evening (Kocherlakota, Lockhart, Evans and Lacker).
NZD/USD 1 day: 0.8400 should cap the NZD today.
NZD/USD 1-3 month: A sustained rise above 0.8355 would put the NZD back into positive-trend mode, below suggests further weakness to 0.8100. Global surprises will drive it in the near term but we expect a fresh high by late 2013 on NZ’s improving economy.
AUD/USD 1 day: 1.0460/80 should cap the AUD today, with a dovish leaning RBA statement likely to weigh.
AUD/USD 1-3 month: Remains inside an 18-month consolidation triangle defined by 1.0500 above and 0.9900 below. We expect the eventual break to be upwards.
Westpac Banking Corporation ABN 33 007 457 141 incorporated in Australia (NZ division). Information current as at 2 April 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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