Morning Report Tuesday 14 February 2012 Market wrap
The positive tone during yesterday’s Antipodean sessions extended into London’s. Greece’s parliamentary approval of the austerity plan removed an obstacle to avoiding a messy default, and it now remains for Wednesday’s EZ finance ministers’ meeting to stamp its own approval and clear the way for a new round of rescue funding. Also helping the market tone was China’s Premier Wen, who said economic conditions in Q1 so far warranted PBOC attention. An FT article reported the government has directed its banks to rollover local government loans. The Eurostoxx 50 closed up a muted 0.4% (perhaps due to scepticism Greece will fully execute the plan) and the S&P500 is 0.7% higher. US 10yr treasury yields are unchanged at 1.99% having earlier fallen from 2.03% to 1.96% in London. Peripheral Eurozone debt was quiet apart from Portugal which shed 56bp from its 10yr yield.
The US dollar index is slightly weaker. EUR extended gains until the London morning to 1.3284, then reversing to 1.3199 for little net change on the day. USD/JPY fell from 77.75 to 77.40. GBP consolidated between 1.5770 and 1.5825 as its QE3 program started with a GBP1.5bn purchase of 3y-7yr government bonds. AUD extended its domestic rally to 1.0779 and then retreated to 1.0723 with the EUR. NZD similarly peaked during early London at 0.8376 and slipped to 0.8331. AUD/NZD slipped from 1.2890 to minor support at 1.2860.
Economic wrap
No significant US or European data to report.
Market outlook
AUD/USD and NZD/USD outlook next 24 hours: Australia’s NAB business survey and a speech from the RBA Assistant Governor on Europe’s effect on Australian markets will be watched, and NZ food prices are of minor interest. US retail sales tonight should continue the strong run of data there. AUD and NZD broke above daily resistance yesterday, deferring the bearish case. AUD has immediate resistance at 1.0780 and support at 1.0690. NZD similarly has resistance today at 0.8380.
Westpac Banking Corporation ABN 33 007 457 141 incorporated in Australia (NZ division). Information current as at 14 February 2012. 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’sfinancial 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 withoutnotice 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.
The positive tone during yesterday’s Antipodean sessions extended into London’s. Greece’s parliamentary approval of the austerity plan removed an obstacle to avoiding a messy default, and it now remains for Wednesday’s EZ finance ministers’ meeting to stamp its own approval and clear the way for a new round of rescue funding. Also helping the market tone was China’s Premier Wen, who said economic conditions in Q1 so far warranted PBOC attention. An FT article reported the government has directed its banks to rollover local government loans. The Eurostoxx 50 closed up a muted 0.4% (perhaps due to scepticism Greece will fully execute the plan) and the S&P500 is 0.7% higher. US 10yr treasury yields are unchanged at 1.99% having earlier fallen from 2.03% to 1.96% in London. Peripheral Eurozone debt was quiet apart from Portugal which shed 56bp from its 10yr yield.
The US dollar index is slightly weaker. EUR extended gains until the London morning to 1.3284, then reversing to 1.3199 for little net change on the day. USD/JPY fell from 77.75 to 77.40. GBP consolidated between 1.5770 and 1.5825 as its QE3 program started with a GBP1.5bn purchase of 3y-7yr government bonds. AUD extended its domestic rally to 1.0779 and then retreated to 1.0723 with the EUR. NZD similarly peaked during early London at 0.8376 and slipped to 0.8331. AUD/NZD slipped from 1.2890 to minor support at 1.2860.
Economic wrap
No significant US or European data to report.
Market outlook
AUD/USD and NZD/USD outlook next 24 hours: Australia’s NAB business survey and a speech from the RBA Assistant Governor on Europe’s effect on Australian markets will be watched, and NZ food prices are of minor interest. US retail sales tonight should continue the strong run of data there. AUD and NZD broke above daily resistance yesterday, deferring the bearish case. AUD has immediate resistance at 1.0780 and support at 1.0690. NZD similarly has resistance today at 0.8380.
Westpac Banking Corporation ABN 33 007 457 141 incorporated in Australia (NZ division). Information current as at 14 February 2012. 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’sfinancial 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 withoutnotice 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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