Sharechat Logo

Morning FX thoughts - 29 Nov'11

Westpac Global Markets Strategy Group

Tuesday 29th November 2011

Text too small?

Risk sentiment bounced on the good rumours. The stories coming from Europe since the weekend have generally been positive, even if much is unsubstantiated, and that appears to be fuelling hopes that policymakers are nearing a final solution.

The IMF officially denied that Italy had requested funding, but a German newspaper Welt am Sontag wrote that the AAA Eurozone countries are considering a joint bond program to help stabilise the wider Eurozone’s debt markets (later denied by the German FM). It also said leaders Merkel and Sarkozy are discussing an agreement for tighter fiscal discipline in future which doesn’t require treaty changes.

The Belgian 10yr bond auction went well at a 2.6 bid-cover ratio (vs 1.7 previously), although it had to pay 5.66% for the money (vs 4.37%).

US Thanksgiving Day retail sales, up 16% yoy, also helped market sentiment. The S&P500 is currently up 3.0%, and has formed a bullish key day reversal.

The CRB commodities index is up 0.5%, oil +0.5%, copper +3.0% and gold +1.6%. US 10yr treasury bond yields are 3bp higher at 2.00% having touched 2.08% early NY. Among the EZ peripherals, Greece (+103bp to a fresh high of 30.90%) and Portugal (+81bp to a fresh high of 13.45%) remained unloved.

The US dollar index retreated amid the better risk sentiment. EUR bounced from 1.3273 to 1.3399 during the London morning but slipped to 1.3307 in NY. USD/JPY extended its rally from 77.60 to 78.24. AUD rose from 0.9834 to 0.9976 before slipping to 0.9886 a few hours ago. NZD ground higher to 0.7575 before settling above 0.7537. AUD/NZD rose from 1.3080 to 1.3180.

AUD/USD and NZD/USD outlook next 24 hours: AUD appears to be correcting the month-long decline, the target window for this bounce 0.9920-1.0335. The NZD’s target window is 0.7575-0.7910. Today’s main event is the Eurozone finance ministers’ meeting in Brussels, a potential source of headlines on the debt crisis tonight.

 



  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

NZ dollar gains on G20 preference for growth
NZ dollar dips as Wellington CBD checked for quake damage
NZ dollar gains, bolstered by RBA minutes, strong dairy prices
NZ dollar falls after central bank says it may scale up currency intervention
NZ dollar gains before CPI, helped by dairy gains, rally on Wall Street
NZ dollar trades little changed as US budget talks bear down on deadline
NZ dollar falls with equities on view US to sail over fiscal cliff
NZ dollar weakens as fiscal cliff looms, long bets unwind
NZ dollar sinks to three-week low as equities fall, fiscal talks in focus
NZ dollar slips as fiscal cliff talks grind slower in Washington