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Westpac Institutional Bank Morning Report

Fuseworks Media
Fuseworks Media
Westpac Institutional Bank Morning Report

US equities continued a two-week rally, catching up to the weekend's good China data as well as the more gradual phase in of Basel III capital requirements for banks.

The S&P500 rose at the physical open but faltered thereafter and is currently up 0.9%, banks and financials up 2.5%. It was a similar bullish story earlier in Asian and European equity markets.

Commodities gained around 0.9% overall, oil up 0.9%, and copper up 2.1%, particularly benefiting from the China data given the country is the world's largest user of the metal. US treasuries behaved in more real-time fashion, and were bid from the European morning as US equity futures faltered.

The 10yr shed 12bp from a 2.85% high to the current 2.73%. The US budget deficit for July was reported at $91bn compared to $96bn expected and weighed on yields late in the NY session.

The US dollar underperformed all the majors yesterday, the index falling to neckline support at 81.80 amid the risk-seeking atmosphere. EUR built on the Sydney session gains to reach 1.2893. USD/JPY spiked briefly at midday Europe to 81.16, and then fell with US yields to 83.51.

AUD continued its impressive rise until the NY open, when it peaked at 0.9362, last seen on 15 April, and spent the remainder of the US session consolidating around 0.9350.

NZD was more volatile but also made a fresh month-high at 0.7343. AUD/NZD remained in its sideways range between 1.2730 and 1.2760.

No economic data to report out of US/Can/Europe/UK. EU Commission published revised economic forecasts but nothing surprising there.


AUD/USD and NZD/USD outlook next 24 hours: AUD momentum remains strong and continues to target the 0.9400 area, a major top between October 2009 and April 2010. Having reached the 0.7350 area, NZD now looks to challenge 0.7400, the July high.

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