Westpac Global Markets Strategy Group
Thursday 16th February 2012
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Yesterday’s Asian session rally in risk assets wilted. Earlier reports that China would provide support for the Eurozone rescue influenced markets until around midday London, but fresh reports that Eurozone officials were considering delaying the next Greek bailout package until after the April elections reversed sentiment.
The S&P500 is currently down 0.2% from an earlier position of +0.6%. US manufacturing indicators from the NY regional survey and industrial production report were positive but had only a brief market impact. The CRB commodities index is up 0.2%, oil +0.6%, copper -0.3%, and gold +0.4%.
The US 10yr treasury yield is 3bp lower at 1.91%, the FOMC minutes due in 30 minutes. Some Eurozone peripherals were under pressure, Greece’s 2yr yield up 2570bp to 209.60% - a new record high, Italy’s 10yr up 17bp and Spain’s 10yr up 15bp.
The US dollar index is around 0.3% stronger and at a three-week high. Underperformer EUR fell from early London’s 1.3191 to 1.3053, slightly above-consensus (but still negative) GDP results largely ignored. USD/JPY made a fresh four-month high of 78.66 in Asia, slipping to 78.20 in NY.
AUD extended domestic session gains to 1.0777 but fell with the EUR from midday London to 1.0703. Outperformer NZD was unruffled by a 3% fall in dairy prices at the Fonterra auction, peaking at 0.8422 – a fresh five-month high – before slipping to 0.8346 in NY. AUD/NZD found support at around 1.2800.
AUD/USD and NZD/USD outlook next 24 hours: Australia’s employment report is the local highlight, a rebound from the previous weak result possible. NZ has consumer confidence and PMI. Trend support for AUD today is at 1.0660. Similarly NZD channel support is at 0.8300, a break of which would have longer term bearish implications.
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