Share This Story
Australia & NZ Morning Thoughts
Australia & NZ Morning Thoughts
The US dollar and US interest
rates fell. The main catalyst was a surprisingly weak Q1 US GDP report.
Also contributing was news that a special closed Fed Board meeting was
held yesterday, raising speculation a pause in tapering was discussed.
However, the FOMC did taper QE by another $10bn as was widely expected.
The S&P500 took all this in its stride and is up 0.3% currently.
6:12AM, 01 May 2014
sentiment: The US dollar and US interest rates fell. The main
catalyst was a surprisingly weak Q1 US GDP report. Also contributing was
news that a special closed Fed Board meeting was held yesterday, raising
speculation a pause in tapering was discussed. However, the FOMC did
taper QE by another $10bn as was widely expected. The S&P500 took all
this in its stride and is up 0.3% currently.
rates: US 2yr treasury bond yields fell from 0.44% to 0.41%
following the GDP report, while 10yr yields fell from 2.72% to 2.64%. The
FOMC announcement had little effect, while the remaining US data releases
(private sector payrolls, personal consumption and Chicago PMI all beat
estimates) caused only minor ripples.
Australian 3yr government bond yields (implied by futures)
followed the US move and fell from 2.97% to 2.92%, while the 10yr yield
fell from 3.97% to 3.90%.
The US dollar index fell following the GDP report and made a three-week
low. EUR initially fell to 1.3775 following a slightly disappointing CPI
report but quickly reversed as US factors took hold, rising to 1.3877.
USD/JPY fell from 102.66 to 102.03. AUD was volatile, fluctuating between
0.9253 and 0.9296 before pushing higher to 0.9301. NZD performed well,
rising from 0.8350 to 0.8633. AUD/NZD fell from 1.0860 to 1.0767.
tapers further $10bn. The first paragraph of
the statement describing the current state of the economy noted, inter
alia, “that growth in
economic activity has picked up recently, after having slowed sharply
during the winter in part because of adverse weather conditions....
Household spending appears to be rising more quickly. Business fixed
investment edged down, while the recovery in the housing sector remained
slow.” That compared to the March statement which assessed “that growth
in economic activity slowed during the winter months, in part reflecting
adverse weather conditions... Household spending and business fixed
investment continued to advance, while the recovery in the housing sector
remained slow.” Essentially the FOMC acknowledged the weak Q1 growth
story that they pre-empted on March 19, then tweaked the wording
according to the detail in today’s GDP report, discussed below. How the
economy performs in Q2 will be pivotal not, maybe, to ongoing tapering
decisions, but certainly to the assessment of when to begin to remove
US GDP growth
stalled in Q1, printing just 0.1% annualised, after 3.3% annualised in H2
2013 . Personal consumption of household services contributed
2.0 ppts to near zero growth, at the expense of spending on durable and
non-durable goods, both flat in the quarter. That is similar in one
respect to the Q4 consumption picture, 1.6 ppts from household services
but a weak durables growth contribution of just 0.2 ppt, though
non-durables held up at just under 0.5 ppt in Q4. In Q1, household
consumption was offset by falling business investment (-0.3 ppts) and
housing spending (-0.2 ppts), and drags from net exports (-0.8 ppts) and
inventory rundown (-0.6 ppts). Government took off another 0.1 ppts. Some
of that is due to the harsh winter both adding to and taking from growth
(consumption of utilities up, destocking down), but this is also further
evidence that GDP growth was overstated in late 2013 by seasonal issues
most likely, corrected for in Q1 (which overstated the weakness). The Fed
tapered, in part, on the stronger looking economy in Dec, but the emperor
was wearing no (new) clothes it seems... neither were Americans
apparently, given the flat consumption of non-durables noted above. The
core PCE deflator was steady at 1.3% annualised.
private payrolls rose 220k in April, and
back revisions worth 33k lifted Feb and March.
Fed factory index soared from 55.9 in March to 63.0 in April,
its highest since October with faster orders, production and jobs growth.
rose from 0.5% yr to 0.7% yr in April,
according to the flash estimate based on German and Spanish figures, and
in line with our below consensus forecast.
today: NZ’s calendar is empty but Australia has terms of trade
to watch. The day’s highlight will probably be China’s PMI (official
version). US data includes jobless claims, personal income and spending,
the PCE deflator, ISM manufacturing activity and construction spending.
AUD/USD 1 day:
May play catchup to the NZD today and rise to 0.9315.
month: The medium term looks more constructive, with a retest
of 0.9450 possible during the months ahead. RBA’s neutral policy bias and
some encouraging Australian economic data (CPI aside) are supportive.
NZD/USD 1 day:
Needs to move above 0.8640 to change the near term bias from negative to
positive. We expect it to trade between 0.8550 and 0.8630 today.
month: The RBNZ tightening cycle will remain supportive but much
is already priced in. That means US factors will become more important
day: Near term momentum has flipped to negative. If 1.0760
below gives way, we will target the 1.0600 area.
month: By mid-year we expect another stab at 1.05 below. The
multi-year decline has already undershot fair value by around 7% we
estimate. That said, over/undershoots have historically been worth 10%,
suggesting there is potential for lower still, particularly if RBNZ has
hiked three times by June.
yields 1 day: In response to movement in
Australian bond futures overnight the 2yr should open around 2.94% while
the 10yr should open around 4.22%.
yields 1-3 month: The 2yr is heading towards the lower
boundary of the multi-month 2.80%-3.05% range. The 10yr is heading
towards 4.20% below, with further downside potential.
yields 1 day: In response to overnight changes in
US and Australian bond yields the 2yr should open down 2bp at
3.98%, while the 10yr should also open down 3bp at 4.88%.
yields 1-3 month: The upward trend in NZ interest
rates remains intact, mainly due to NZ’s improving fundamentals and RBNZ
tightening cycle which is now in play. The 2yr targets beyond 4.30%
during the next few months. The 10yr could slip to 4.60% during the next
month, following the US, but should rise above 5.20% later in the year on
the RBNZ . The curve should flatten throughout 2014.
© Copyright 2014 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
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
China, 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 by
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. This material
and this website and any information contained therein is directed at a)
persons who have professional experience in matters relating to investments
falling within Article 19(1) of the Financial Services Act 2000 (Financial
Promotion) Order 2005 or (b) high net worth entities, and other persons to whom
it may otherwise be lawfully communicated, falling within Article 49(1) of the
Order (all such persons together being referred to as “relevant persons”). The
investments to which this material and this website relates are only available
to and any invitation, offer or agreement to subscribe, purchase or otherwise
acquire such investments will be engaged in only with, relevant persons. Any
person who is not a relevant person should not act or rely upon this material
and this website or any of its contents. In the same way, the information
contained in this material and this website is intended for “eligible
counterparties” and “professional clients” as defined by the rules of the
Financial Services Authority and is not intended for “retail clients”. With
this in mind, Westpac expressly prohibits you from passing on the information
in this material and this website to any third party. In particular this
material and this website, website content and, in each case, any copies
thereof may not be taken, transmitted or distributed, directly or indirectly
into any restricted jurisdiction.
operates in the United States of America as a federally licensed branch,
regulated by the Office of the Comptroller of the Currency. Westpac is also
registered with the US Commodity Futures Trading Commission (“CFTC”) as a Swap
Dealer, but is neither registered as, or affiliated with, a Futures Commission
Merchant registered with the US CFTC. Westpac Capital Markets, LLC (‘WCM’), a
wholly-owned subsidiary of Westpac, is a broker-dealer registered under the
U.S. Securities Exchange Act of 1934 (‘the Exchange Act’) and member of the
Financial Industry Regulatory Authority (‘FINRA’). This communication is
provided for distribution to U.S. institutional investors in reliance on the
exemption from registration provided by Rule 15a-6 under the Exchange Act and
is not subject to all of the independence and disclosure standards applicable
to debt research reports prepared for retail investors in the United States.
WCM is the U.S. distributor of this communication and accepts responsibility
for the contents of this communication. All disclaimers set out with respect to
Westpac apply equally to WCM. If you would like to speak to someone regarding
any security mentioned herein, please contact WCM on +1 212 389 1269. All
disclaimers set out with respect to Westpac apply equally to WCM.
in any non-U.S. securities or related financial instruments mentioned in this
communication may present certain risks. The securities of non-U.S. issuers may
not be registered with, or be subject to the regulations of, the SEC in the
United States. Information on such non-U.S. securities or related financial
instruments may be limited. Non-U.S. companies may not subject to audit and
reporting standards and regulatory requirements comparable to those in effect
in the United States. The value of any investment or income from any securities
or related derivative instruments denominated in a currency other than U.S.
dollars is subject to exchange rate fluctuations that may have a positive or
adverse effect on the value of or income from such securities or related
author of this communication is employed by Westpac and is not registered or
qualified as a research analyst, representative, or associated person under the
rules of FINRA, any other U.S. self-regulatory organisation, or the laws, rules
or regulations of any State. Unless otherwise specifically stated, the views
expressed herein are solely those of the author and may differ from the
information, views or analysis expressed by Westpac and/or its affiliates.
For the purposes of Regulation AC only: Each analyst whose name appears in this
report certifies that (1) the views expressed in this report accurately reflect
the personal views of the analyst about any and all of the subject companies
and their securities and (2) no part of the compensation of the analyst was,
is, or will be, directly or indirectly related to the specific views or
recommendations in this report.
For XYLO Foreign Exchange clients: This information is provided to you solely
for your own use and is not to be distributed to any third parties. XYLO
Foreign Exchange is a division of Westpac Banking Corporation ABN 33 007 457
141 and Australian credit licence 233714. Information is current as at date
shown on the publication. 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. XYLO Foreign
Exchange’s combined Financial Services Guide and Product Disclosure Statement
can be obtained by calling XYLO Foreign Exchange on 1300 995 639, or by
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. 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.
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."