Sunday August 11, 2013 - 20:34:48 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex - Westpac Morning Report
Morning Report Monday 12 August 2013
Global market sentiment: US equities and interest rates were slightly lower. US data for wholesale trade and inventories disappointed, and China monthly batch of data was mixed. the S&P500 closed down 0.4% although the CRB commodities index closed up 0.7%.
Interest rates: The US 10yr treasury bond yield tested the bottom of the recent range, falling from 2.61% to 2.57%. The Australian 3yr Government bond yield fell from 2.59%to 2.55%, while the 10yr fell from 3.73% to 3.66%.
Currencies: The US dollar index rose slightly in London and consolidated in NY. EUR fell from 1.3390 to around 1.3330. AUD rose from 0.9140 to 0.9215. NZD rose from 0.8000 to around 0.8060. AUD/NZD rose from 1.1390 to 1.1450.
US wholesale inventories fell 0.2% in June, their fourth decline in five months, as firms continue to keep excess stocks at a minimum.
Canadian employment fell 29k in July after an essentially flat June outcome which in turn followed Mayís 95k gain. These are volatile numners but in the sevent months of 2013 so far joibs growth has averaged 6k, compared to an 18k average in the same period last year. The rate edghed up to 7,2%, little changed from 7.3% a year ago. Meanwhile, housing starts fell 0.5% in July, further unwinding Mayís 14%
jump, with single family starts once again down by around 5%, as in June. Total starts are down 9.5% yr, while singles have dropped 13.0% yr.
UK exports rose 4.9% in June (despite falling into the rest of Europe), while imports were up 2.0%, and the trade deficit narrowed from GBP8.7bn to GBP8.1bn.
NZD/USD 1 day: This upward correction could continue further toward 0.8100 during the days ahead.
NZD/USD 1-3 month: If the Fed starts tapering in Sep or Oct, the downtrend since April should resume (confirmed by a break below 0.7684) and could run as far as the low 0.70ís.
AUD/USD 1 day: An upward correction could continue further toward 0.9300 during the days ahead.
AUD/USD 1-3 month: Beyond this corrective bounce, which could run to 0.9300, the downtrend since April should resume and target the low 0.80ís. The Australian data flow is unsupportive, and the RBA is likely to ease further to 2.0% by Q1 2014.
AUD/NZD 1 day: still correcting toward 1.1500. Below 1.1230 signals this consolidation is complete and the downtrend is resuming.
AUD/NZD 1-3 month: The downtrend since March remains strong and targets 1.1000 during the months ahead. Relative fundamentals (e.g. RBA easing to 2.0% vs RBNZ stuck at 2.5%) favour the NZD medium term.
NZ swap yields 1 day: In response to changes in US and Australian bond yields overnight (see above) swap rates should open 2-3bp lower this morning.
NZ swap yields 1-3 month: The uptrend since June 2012 remains intact. By late-2013 we would expect to see the 2yr above 3.40% based on NZís improving fundamentals and eventual RBNZ tightening in 2014. The US-influenced 10yr yield has also confirmed its uptrend and targets 4.68% next.
Westpac Banking Corporation ABN 33 007 457 141 incorporated in Australia (NZ division). Information current as at 12 August 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 Westpacís
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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