consolidative evening session, with only residual weakness lingering from the
earlier Euro-zone banking worries. US President
Obamaâ€™s release of the US$275 billion mortgage-assistance plan was countered by
weak US housing data,
leaving most asset classes little changed. The S&P500â€™s session dip to 780,
and failure to rebound above the key 800 level, targets the November low of 740. US
Treasuries weakened on the funding consequences (adding to the US$2 trillion of
new issuance in 2009) of Obamaâ€™s plan.
NZD managed to
hold above the 0.5050 level, reaching around 0.5135 early Europe, in a quiet
session for the currency. Consensus forecasts for New Zealandâ€™s trading
partners were revised lower again, and will weigh on the RBNZ, interest rates,
and the currency.
AUD ranged from
0.6340 to 0.6430, which was surprising given the Moodyâ€™s report saying the
major Australian banksâ€™ ratings may be reassessed in light of the deteriorating
outlook. That negative news was best expressed by AUD/NZD, slipping to the
lower end of the 1.2470 to 1.2570 daily range.
EUR fell a cent
during the European afternoon, from 1.2640, the lack of follow through
attributed to option levels around 1.25 being protected. Apart from a brief dip
to 1.41, the BOE minutes revealing a unanimous vote for future quantitative
easing via gilts purchases, GBP hovered around 1.42 for most of
the session. USD/JPY touched a technical level at 94, as the
Topix banks index almost reached a 25-year low.
housing starts plunge 16.8% in Jan. The recent string of three consecutive 15-16%
monthly declines in housing starts has taken the total decline in starts from
their early 2006 peak to 80% (the permits decline from their late 2005 peak is
77%). The regional data showed only small pockets where activity might be
picking up, such as a 2.5% rise in singles starts in the West (after a
cumulative 31% drop in the prior two months!). Unseasonally poor weather in the
Midwest and northeast may have weighed on starts
industrial production down 1.8% in Jan. The industrial production data showed
yet another steep decline, exactly in line with Westpacâ€™s â€“1.8% forecast, mirroring
those falls seen right across the world in recent months now that global trade
is grinding to a halt. Auto production slumped a massive - wait for it - 23.4%
but there were broad-based declines across most of the industrial spectrum with
the exception of defence and utilities.
industrial survey found much weaker orders and slightly softer expectations for
output and prices over the next quarter in its second survey for 2009. Data
like these imply that Q1 GDP could contract at an even faster pace than Q4â€™s â€“1.5%
(which we expect will itself be revised lower).
minutes to the Bank of Englandâ€™s February meeting, when rates were
cut by 50bp to 1.0%, showed another 8:1 vote with the dissenter, David Blanchflower,
once again voting for a steeper cut (of 100bp to 0.5%). As discussed at length
at last weekâ€™s quarterly BoE press conference, quantitative easing is on the table
(though not necessarily at a zero interest rate): â€śit seemed likely that the
Committee would want to consider a range of asset purchases in due course...
financed by the creation of central bank moneyâ€ť.
The past two
days of ranging between 0.5060 and 0.5140 were preparation for a downside
break, which we should see in the next 24 hours.
Speizer, Senior Market Strategist, NZ, Ph: (04) 470 8266
contributions from Westpac Economics
Release Last Forecast
Motor Vehicle Sales 1.8% â€“0.5%
PPI/Core â€“1.9%/0.2% 0.0%/0.1%
Jobless Claims w/e 21/2 623k 620k
Index 0.3% â€“0.2%
Feb Philadelphia Fed Index â€“24.3
Target Rate Decision 0.10% 0.10%
Nationwide Dept. Store Sales %yr â€“9.4% â€“
UK Jan PSNCR
ÂŁbn 44. 27.7
Supply M4 %yr 16.1% 15.7%
Leading Indicators â€“0.6% â€“0.6%
â€˘ NZ Weekly
Forex Outlook (16 February)
â€˘ NZ Q4
Retail Sales Review (13 February)
â€˘ NZ Weekly
Forex Outlook (9 February)
â€˘ NZ Q4 HLFS
Review (5 February)
â€˘ NZ Q4 LCI
and QES Review (2 February)
papers/publications are available on Online Research on Westpac
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