Monday May 13, 2013 - 20:34:09 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex - Westpac Morning Report
Morning Report Tuesday 14 May 2013
Global market sentiment: Equities and commodities saw little net change overnight. China’s sub-consensus industrial production report and renewed concerns the Fed is preparing a strategy to reduce the current pace of stimulus appeared to cap sentiment. An above-consensus US retail sales report supported the latter view. The S&P500 is down 0.1% and the CRB commodities index is up 0.2 %.
Interest rates: US 10yr treasury yields rose from 1.89% to 1.94% - a seven week high - with the latest Fed scare still resonating. Australian 3yr government bond yields ranged between 3.56% and 3.59%, while the 10yr yield ranged between 3.21% and 3.25%. Spanish and Italian 10yr yields both rose 9bp after a lukewarm Italian auction.
Currencies: The USD index is slightly firmer. EUR largely ranged sideways between 1.2970 and 1.3000 barring a brief dip to 1.2945 following ECB member Visco’s comment that it could cut the deposit rate to below zero. USD/JPY rose from 101.60 to 102.10. AUD extended its recent decline from 1.0000 to 0.9940. NZD similarly fell from 0.8320 to 0.8230. AUD/NZD rose from 1.2020 to 1.2080.
US retail sales rose 0.1% in April. An unexpected 1% rise in auto sales, contrasting with industry unit sales figures which were down more than 2% last month, prevented a second negative month for headline retail sales, but gasoline prices falling constrained the total rise to just 0.1%, despite a 0.6% bounce in core retailing (ex autos and gas) after a flat March (revised up from -0.1%). Apart from gasoline sales, only food and personal care spending declined in April; the other eleven storetypes all posted gains except for flat furniture sales. In March, eight storetypes recorded falls.
US business inventories flat in March, for the second month running. The new information in the March report was a 0.5% fall in retail stocks; previously reported factory stocks were flat but wholesalers saw a 0.4% rise.
The Bank of Israel cut rates 0.25% to 1.5% and announced a program to sell the shekel. Forceful action from Governor Stanley Fischer!
Brief outlook (apologies but traveling): The NZD/USD break below 0.8260 points to 0.8160 next. Any AUD/USD corrective bounce today should be capped by 1.0000. Regarding AUD/NZD, we are awaiting a corrective bounce to at least 1.2150 to complete before the trend decline can resume to below 1.1900.
Westpac Banking Corporation ABN 33 007 457 141 incorporated in Australia (NZ division). Information current as at 14 May 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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