Sunday April 21, 2013 - 22:19:45 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex - Westpac Morning Report
Morning Report Monday 22 April 2013
Global market sentiment: Equities rose on Friday, helped by the G20 which effectively endorsed Japan’s easy policy stance. The S&P500 closed up 0.9% (although still down 2.1% on the week). Earlier, the Eurostoxx 50 close up 0.8%, and the Shanghai Composite gained 2.1% (helped by officials forecasting higher GDP growth). Among commodities, Brent oil rose 0.5%, gold gained 1.0%, but copper fell 1.8% and iron ore fell 0.4%.
Interest rates: The US 10yr treasury yield ended a consolidative week doing exactly that, ranging between 1.69% and 1.71%. Inflation-linked bonds underperformed amid downgraded market views on the outlook for inflation, although large bond fund PIMCO said it is buying into the weakness. Speculators in the futures market extended their long 10yr note positions further. Australia’s 3yr bond yield ranged between 2.67% and 2.70% the 10yr between 3.18% and 3.23%.
Currencies: The US dollar index rose by around 0.6%. EUR rose from 1.3060 to 1.3129 before slumping in NY to 1.3047 after ECB members kept easing expectations alive. Underperforming yen was the biggest mover, USD/JPY rising from 98.50 to 99.69 around the G20 comments. AUD peaked early London at 1.0359 and then fell to 1.0276. NZD similarly fell from 0.8492 to 0.8403. AUD/NZD ranged between 1.2195 and 1.2230. The weekly futures speculative positioning report showed NZD longs reaching a record high, AUD longs pared, JPY shorts increased, and EUR shorts pared.
No major US economic data released on Friday.
Canadian inflation slowed from 1.2% yr to 1.0% yr in Mar, mainly due to lower gasoline prices; the BoC core rate was steady at 1.4% yr, off its Jan low of 1.0% yr but still lower than ion the first eight months of last year. Meanwhile wholesale sales were flat in Feb, with auto sales gains offset by computers and personal care product declines.
German PPI fell 0.2% in Mar to be up 0.4% yr, a new cycle low; the last time producer price inflation slowed to this pace was in early 2009 when the economy was deep in recession. Other data showed the Euroland current account surplus widen to a new record of €16.3bn in Feb.
Event risk today: There’s only NZ migration worth noting in the local calendars today. The global calendar is quiet also.
NZD/USD 1 day: 0.8380 should give way, targeting 0.8300 near term.
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: The near term is unclear. The corrective bounce since 18 April may have another leg which would be confirmed by a rise above 1.2256. Below 1.2175 says the longer downtrend continues.
AUD/NZD 1-3 month: The trend decline to 1.2100 and lower remains in progress. Relative fundamentals (including RBA vs RBNZ) favour the NZD medium term.
NZ 2yr swap yield 1 day: Opening up 2bp at 2.88%.
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: 1.0290 should give way today, targeting 1.0200 near term.
AUD/USD 1-3 month: The sideways consolidation since August 2012 remains in progress. Within that, the multi-week outlook is negative.
Westpac Banking Corporation ABN 33 007 457 141 incorporated in Australia (NZ division). Information current as at 22 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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