Monday August 12, 2013 - 20:37:55 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex - Westpac Morning Report
Morning Report Tuesday 13 August 2013
Global market sentiment: The S&P500 is slightly weaker amid little news flow. It is currently down 0.3% - a nine-day low - having fallen in London and partly recovered in NY. One factor cited was Japanís disappointing Q2 GDP result. Commodities were more upbeat, though, the CRB index up 1.0% currently. Iron ore jumped 4.2% to a three-month high.
Interest rates: US 10yr treasury bond yields initially dropped from 2.60% to 2.55% in London, a think-tank report cited, but rebounded to 2.61% in NY. The US Budget report showed a slightly larger deficit for July but a preserved trend of sharp deficit reduction over the past year, highlighting the Fedís bond purchases are becoming an increasing share of the total.
Australian 3yr government bonds yields eked a narrow range of 2.57%-2.60%, while the 10yr ranged between 3.67% and 3.72% for little net change.
Currencies: The US dollar index extended its bounce off last Thursdayís major low. EUR fell from 1.3330 to 1.3277 during the London morning but partly recovered to 1.3310. USD/JPY rose in the wake of Japanís GDP release to 96.91 and then consolidated in NY. AUD fell from 0.9210 to 0.9135 in London and then consolidated. NZD fell from 0.8040 to 0.7993 early London and then consolidated. AUD/NZD slipped from 1.1460 to 1.1405.
US Federal budget deficit was $97.6bn in July up from $69.6bn last year, with receipts up 8% yr but outlays 17% yr higher. That said, the year to date deficit of $607bn in 2013 compares to $974bn in 2012 ytd, at least in part reflecting the spending sequester.
Event risk today: Australia has monthly business confidence and the pre-election fiscal outlook. In the US thereís retail sales to watch.
NZD/USD 1 day: This 5-day upward correction should 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: This 5-day upward correction should 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: We are awaiting an eventual break below this 1.12-1.15 consolidation.
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.
Westpac Banking Corporation ABN 33 007 457 141 incorporated in Australia (NZ division). Information current as at 2 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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