Monday April 15, 2013 - 20:43:55 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex - Westpac Morning Report
Morning Report Tuesday 16 April 2013
Global market sentiment: Global market sentiment: Risk aversion set in for a second day, intensifying with disappointing economic data. China’s releases yesterday, including GDP, all missed the mark, extending the recent sharp declines in commodities. US manufacturing activity in NY also disappointed. There was an apparent escalation in Korean tensions, and as we write news of explosions at the Boston marathon is breaking. The S&P500 is currently down 2.0%, sitting on technical support since November. The CRB commodities index is down 2.6% to a 10-month low (gold plunging 8.7% to a 2-year low, copper -2.2%, Brent oil -2.8%).
Interest rates: The US 10yr treasury yield fell from 1.74% to 1.68%, consistent with the risk averse backdrop. Eurozone peripheral bonds were again stable. Australia’s 3yr bond yield fell from 2.72% to 2.66% - a 2 ½ -month low, while the 10yr fell from 3.26% to 3.19%.
Currencies: Risk aversion dominated weak US data to push the US dollar index slightly higher. EUR fell during the London afternoon from 1.3107 to 1.3033. USD/JPY fell from 98.25 to 97.06, outperforming yen following a risk-averse script. AUD extended its post-China slump from 1.0450 to 1.0319 – a one-month low. NZD fell from 0.8513 to 0.8408. AUD/NZD ranged between 1.2245 and 1.2295.
US New York Fed factory index edged down from 9.2 to 3.1 in April, following the general trend of weaker factory readings after a strong start to the year. New orders and shipments fell further, but the employment measures and capital expenditure plans have continued to rise since the start of the year.
US NAHB homebuilders’ survey slipped unexpectedly in April for the third month in a row, from 44 to 42 – the lowest since October last year. The decline was due to softer reported current sales and buyer traffic. Homebuilder optimism for future sales continued to rise though, to the highest since 2006.
Canada existing home sales rose 2.4% in March, reversing the Feb decline in this new and fairly choppy data series.
Event risk today: Today’s local highlight is the RBA minutes. Tonight there’s US CPI plus other data, as well as a dairy auction, for markets to watch.
NZD/USD 1 day: This downward reaction is correcting the rally which started on 14 March and should tire by 0.8360.
NZD/USD 1-3 month: The uptrend since June 2012 remains intact as long as 0.8160 holds. The currency benefits from NZ’s strong fundamentals plus a resurgence of NZGB inflows.
AUD/NZD 1 day: This corrective bounce should push above 1.2310 today.
AUD/NZD 1-3 month: The trend decline to 1.2100 and lower should resume once this upward correction completes. Relative fundamentals favour the NZD medium term.
NZ 2yr swap yield 1 day: Opening down 1bp at 2.84%.
NZ 2yr swap yield 1-3 month: The downward correction which started on 15 Feb could yet extend lower to the 2.70%-2.80% area. As long as that area holds though, we expect an eventual rise above 3.20% based on NZ’s improving fundamentals and eventual RBNZ tightening.
AUD/USD 1 day: This downward reaction is correcting the rally which started on 4 March and should tire by 1.0300.
AUD/USD 1-3 month: The recent break above a 2-year old consolidation triangle defined by around 1.0510 above and 0.9850 below is now seen as false. The consolidation continues.
Westpac Banking Corporation ABN 33 007 457 141 incorporated in Australia (NZ division). Information current as at 16 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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