Monday August 25, 2008 - 20:49:35 GMT
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Westpac Institutional Bank - www.westpac.co.nz
FX Blog - Morning Report
Morning Report Tuesday 26 August 2008
News and views
USD traded softer to start the week as US stock prices tumbled and despite better than expected housing sales data, though a late squeeze trimmed losses and Londonâ€™s holiday of course ensured poor liquidity. Financial stocks were mostly weak but with some striking exceptions. Lehman Bros sat 5% lower in late trade after Koreaâ€™s Financial Services Commission said a state-owned institution such as KDB should be cautious about foreign acquisitions. The failure of another small bank, Kansas-based Columbian Bank, also unnerved investors. But the GSEs posted gains well over 10% in the final hour on Wall St. The New Zealand dollar was rebuffed several times around 0.7090 and then looked soggy around 0.7040/45.
AUD/USD extended its late Asia bounce as far as 0.8690 amid broad USD selling but retreated to 0.8630/35.
EUR/USD rallied through 1.4800 on several occasions but could not extend, slipping to a more comfortable 1.4750.
USD/JPY set a firmer direction than other major pairs, sliding from near 110.00 in London to as low as 109.05 and recovering only modestly thereafter.
US existing home sales rose 3.1% in July. Existing home sales rebounded from the all-time low recorded in June, though some of the rise will be at the expense of new home sales, released tonight. Foreclosures now account for at least a third of sales, and the backlog of unsold homes increased to a new high of 11.2 months of supply. The median sale price slipped to a -7.1% yoy pace.
The IMF has trimmed its forecasts for world economic growth, according to an unnamed source. In a note prepared for next weekendâ€™s G20 meeting, The IMF forecasts world growth of 3.9% this year, down from 4.1% in their official forecasts published last month.
UK markets closed for summer bank holiday.
NZD should be range-bound to a little firmer near term, after recent NZ data fell short of the gloomiest scenarios. We are neutral on NZD TWI but NZD/USD should find buyers on dips.
Westpac Strategy, 0800 922 239
With contributions from Westpac Economics
Country Release Last Forecast
NZ Jul Merchandise Trade NZDm â€“223 â€“600
RBNZ Inflation Expectations â€“ 2yr Ahead 2.9 3.1
US Jun House Prices %yr â€“15.8% â€“16.8%
Aug Richmond Fed Survey â€“16 â€“10
Jul New Home Sales 0.6% â€“2.5%
Aug CB Consumer Confidence 51.9 53.5
Jun House Prices â€“0.3% â€“0.4%
Aug 5 FOMC Minutes â€“ â€“
Jpn Jul Corporate Services Prices %yr 1.2% 1.4%
Ger Q2 GDP Revision 0.5% a â€“0.5%
Sep GfK Consumer Confidence 2.1 2.5
Aug Ifo Business Climate Index 97.5 100.0
UK Jul BBA Mortgage Lending Â£bn 21.1 â€“
Latest Research Papers/Publications
â€¢ NZ Weekly Forex Outlook (25 August)
â€¢ NZ Weekly Forex Outlook (18 August)
â€¢ NZ Q2 Retail Sales Review (15 August)
â€¢ NZ Weekly Forex Outlook (11 August)
These papers/publications are available on Online Research on Westpac
Institutional Bankâ€™s website (www.wib.westpac.co.nz)
Westpac Banking Corporation ABN 33 007 457 141 incorporated in Australia (NZ division). Information current as at 26 August 2008. 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 Westpacâ€™s financial 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 without notice 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 regulated for the conduct of investment business in the United Kingdom by the Financial Services Authority. Â© 2004 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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