Tuesday October 29, 2013 - 21:02:38 GMT
Share This Story
Westpac Institutional Bank - www.westpac.co.nz
NZ Morning Thoughts - FX & IR
NZ Morning Thoughts - FX & IR
In another case of bad news is good
news, the S&P500 is up 0.4% to a fresh record high, "helped" by
some uninspiring US economic data. Consumer confidence was well short of
expectations. The market expects such sluggishness in the economy to keep the
Fed's money printing programs intact for some time. US interest rates fell
slightly but the US dollar was surprisingly strong.
6:14AM, 30 Oct 2013
Global market sentiment: In another case of bad
news is good news, the S&P500 is up 0.4% to a fresh record high, “helped”
by some uninspiring US economic data. PPI, retail sales, and business
inventories were close to expectations but consumer confidence was well short
of expectations. The market expects such sluggishness in the economy to keep
the Fed’s money printing programs intact for some time. US interest rates
fell slightly but the US dollar was surprisingly strong.
Interest rates: US 10yr treasury bond
yields fell from 2.54% (just before the US data releases) to 2.50%. A 5yr
auction went well, awarded at market yield.
3yr government bond yields (implied by futures) eked a narrow range of 2.98%-3.00%,
sitting at a one month low. The 10yr yield slipped from 3.95% to 3.93%.
Currencies: The US dollar index
fell in response to the US data but later rebounded to a one-week high,
outperforming all the majors on the day. EUR initially rose from 1.3755 to
1.3813, helped by both the weak US data and ECB Nowotny downplaying the
chance of another rate cut, but then curiously fell to 1.3737. USD/JPY rose
from 97.47 to 98.28. AUD extended its recent slide into a fifth day, falling
from 0.9520 to 0.9472 – a two-week low. NZD similarly fell from 0.8280 to
0.8234. AUD/NZD ranged between 1.1484 and 1.1530, making a three-day low.
The October U.S. consumer confidence drop to 71.2 extended the
September decline to 80.2 (was 79.7) from 81.8 in August and a prior 82.1
cycle-high from June that marked the strongest figure since January of 2008.
September retail sales dipped 0.1%, but were up 0.4% excluding autos. There
were no revisions to the August headline 0.2% sales increase, and 0.1% core
gain. For the "control group," sales excluding autos, gas, and
building materials were up 0.5% after a 0.2% August gain.
inventories tracked estimates with a 0.3% August gain that followed an
unrevised 0.4% July increase.
The U.S. Case
Shiller home price index rose 1.3% to 164.53 (nsa) in August for the 20-City
composite index, from a downwardly revised 162.39 in July (was 162.49).
slipped 0.1% in September, and was up 0.1% excluding food and energy. There
were no revisions to August's 0.3% headline gain and unchanged core rate.
Event risk today: The local calendars
are again light. NZ PM Key speaks in Wellington and the RBNZ publishes its
currency flows. Australia has new home sales. The Eurozone has a range of
sentiment surveys. The US has CPI and private sector payrolls, as well as the
FOMC decision which will be watched for changes to the Fed’s outlook on the
NZD/USD 1 day: This downward
correction which started on 22 Oct targets 0.8200 during the next few days.
NZD/USD 1-3 month: NZ positive economic
outlook, the Fed’s delay in tapering QE, plus a tarnished US dollar following
the fiscal squabble, should all support NZD/USD during the next few months towards
0.8675 (30 April peak).
AUD/USD 1 day: This downward
correction which started on 23 Oct remains in progress and targets 0.9410
AUD/USD 1-3 month: A more neutral
sounding RBA and some encouraging data, the Fed’s delay in tapering QE, plus
a tarnished US dollar following the fiscal squabble, should all support
AUD/USD during the next few months beyond 0.9790 (3 June peak).
AUD/NZD 1 day: The 1.1500 level is
breaking down and 1.1450 beckons.
AUD/NZD 1-3 month: A 1.1200-1.1660
sideways range since July is in formation. However, longer term relative
fundamentals (e.g. RBA possibly easing further vs RBNZ hiking) favour the NZD
over a multi-month horizon such that a fall below 1.1200 is expected by early
NZ swap yields 1 day: In response to changes
in US and Australian bond yields overnight (see above) the 2yr should
unchanged at 3.38% and the 10yr should open down `1bp at 4.78%.
yields 1-3 month: The current downward corrections in yields should persist for
a few more weeks, but the 2yr is not expected to fall below 3.10%. By
Dec-2013 the 2yr could reach 3.80% based on NZ’s improving fundamentals and
eventual RBNZ tightening in 2014.
© Copyright 2013 Westpac Bank Corporation
Terms and conditions.
is a service provided by Westpac Institutional Bank (Westpac Banking
Corporation ABN 33 007 457 141 AFSL and Australian credit licence 233714) here
referred to as “Westpac”. 2. Your access to this service is subject to these
terms and conditions, the Westpac Privacy Statement, notices, disclaimers and
any other statements contained on this website. 3. You agree that any view or
opinions expressed in the articles or podcasts contained in WIB IQ are the
author's own and may not necessarily reflect the view or opinions of Westpac.
4. You agree that any commentary contained in WIBIQ is not intended as personal
advice and should not be relied upon as such by you. 5. WIB IQ may contain
information in relation to certain financial products. Westpac makes no
recommendation to buy, hold or sell these financial products, nor does it make
any representations or warranties regarding the financial products. You should
make your own decision in relation to the financial products based on your own
enquiries, the information contained in the relevant disclosure documents, and
the suitability of the relevant financial products to your own investment
objectives, financial situation and particular needs.
Things you should know: Each time someone visits our site, data is
captured so that we can accurately evaluate the quality of our content and make
improvements for you. We may at times use technology to capture data about you
to help us to better understand you and your needs, including potentially for
the purposes of assessing your individual reading habits and interests to allow
us to provide suggestions regarding other reading material which may be
suitable for you.
are located in Australia, this material and access to this website is provided
to you solely for your own use and in your own capacity as a wholesale client
of Westpac Institutional Bank being a division of Westpac Banking Corporation
ABN 33 007 457 141 AFSL 233714 (‘Westpac’). If you are located outside of
Australia, this material and access to this website is provided to you as
material and this website contain general commentary only and does not
constitute investment advice. Certain types of transactions, including those
involving futures, options and high yield securities give rise to substantial
risk and are not suitable for all investors. We recommend that you seek your
own independent legal or financial advice before proceeding with any investment
decision. This information has been prepared without taking account of your
objectives, financial situation or needs. This material and this website may
contain material provided by third parties. While such material is published
with the necessary permission none of Westpac or its related entities accepts
any responsibility for the accuracy or completeness of any such material.
Although we have made every effort to ensure the information is free from
error, none of Westpac or its related entities warrants the accuracy, adequacy
or completeness of the information, or otherwise endorses it in any way. Except
where contrary to law, Westpac and its related entities intend by this notice
to exclude liability for the information. The information is subject to change
without notice and none of Westpac or its related entities is under any
obligation to update the information or correct any inaccuracy which may become
apparent at a later date. The information contained in this material and this
website does not constitute an offer, a solicitation of an offer, or an
inducement to subscribe for, purchase or sell any financial instrument or to
enter a legally binding contract. Past performance is not a reliable indicator
of future performance. The forecasts given in this material and this website
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
involving carbon give rise to substantial risk (including regulatory risk) and
are not suitable for all investors. We recommend that you seek your own
independent legal or financial advice before proceeding with any investment
decision. This information has been prepared without taking account of your
objectives, financial situation or needs. Statements setting out a concise
description of the characteristics of carbon units, Australian carbon credit
units and eligible international emissions units (respectively) are available
at www.cleanenergyregulator.gov.au as mentioned in section 202 of the Clean
Energy Act 2011, section 162 of the Carbon Credits (Carbon Farming Initiative)
Act 2011 and section 61 of the Australian National Registry of Emissions Units
Act 2011. You should consider each such statement in deciding whether to
acquire, or to continue to hold, any carbon unit, Australian carbon credit unit
or eligible international emissions unit.
Additional information if you are located
outside of Australia
New Zealand: The current disclosure statement for the
New Zealand division of Westpac Banking Corporation ABN 33 007 457 141 or
Westpac New Zealand Limited can be obtained at the internet address
www.westpac.co.nz. Westpac Institutional Bank products and services are
provided by either Westpac Banking Corporation ABN 33 007 457 141 incorporated
in Australia (New Zealand division) or Westpac New Zealand Limited. For further
information please refer to the Product Disclosure Statement (available from
your Relationship Manager) for any product for which a Product Disclosure
Statement is required, or applicable customer agreement. Download the Westpac
NZ QFE Group Financial Advisers Act 2008 Disclosure Statement at
Hong Kong, Singapore and India: Westpac Singapore Branch holds a wholesale
banking licence and is subject to supervision by the Monetary Authority of
Singapore. Westpac Hong Kong Branch holds a banking license and is subject to
supervision by the Hong Kong Monetary Authority. Westpac Hong Kong branch also
holds a license issued by the Hong Kong Securities and Futures Commission (SFC)
for Type 1 and Type 4 regulated activity. Westpac Shanghai and Beijing Branches
hold banking licenses and are subject to supervision by the China Banking
Regulatory Commission (CBRC). Westpac Mumbai Branch holds a banking license
from Reserve Bank of India (RBI) and subject to regulation and supervision
Forex Trading News
Daily Forex Market News
Forex news reports can be found on the forex research
headlines page below. Here you will find real-time forex market news reports
provided by respected contributors of currency trading information. Daily forex
market news, weekly forex research and monthly forex news features can be found
Real-time forex market news reports and features providing
other currency trading information can be accessed by clicking on any of the
headlines below. At the top of the forex blog page you will find the latest
forex trading information. Scroll down the page if you are looking for less
recent currency trading information. Scroll to the bottom of fx blog headlines
and click on the link for past reports on forex. Currency world news reports
from previous years can be found on the left sidebar under "FX Archives."