Thursday June 16, 2005 - 23:57:03 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex: Westpac Institutional Bank Morning ReportNew Zealand Dollar: NZD firm against USD and EUR
From opening levels yesterday, around 0.7130, the NZD pared overnight gains against the greenback. However, despite a reported increase in Q1 manufacturing sales of 1.0% pointing to lower revisions of Q1 GDP estimates, the NZD found a base at 0.7105 and recovered to end the local session mid-range. Additional currency strength eventuated during the offshore session with the continued political fallout in Europe and surprisingly soft Philadelphia Fed Survey reading of -2.2 bolstering the currency. NZD/USD established overnight highs of 0.7177, while NZD/EUR maintains levels above 0.5900. The NZD opens at 0.7150 this morning.
Australian Dollar: AUD driven higher on base metal strength
Despite improving against the USD into yesterday's local open, AUD/USD struggled to establish new ground and ran into heavy domestic selling above 0.7700. The pullback in the market was minimal, however and the currency traded between 0.7664 and 0.7703 on the day. Further AUD strength was seen in the offshore session, with the market firmly establishing itself above 0.7700. A weak Philadelphia Fed report and political uncertainty in Europe continued to see the market view AUDs as attractive. Stronger commodity prices especially those of base metals such as copper, which established 16 yr highs overnight in New York, added additional support to the AUD, which opens this morning at 0.7730.
Major Currencies: US dollar firm in face of poor data
US data releases were softer than expected on Thursday but the US dollar remained resilient after a relatively strong week. The Philly Fed Index, a closely watched business outlook survey, came out at -2.2 against expectations of -1.1, it was the weakest number since April 2003. Housing and retail data were also softer than market forecasts, however jobless data was roughly as anticipated. The market has paid more heed to concerns over the European Union constitution and euro negatives. The euro
opened at 1.2120 and drifted lower during NZ trading, falling to a low of 1.2059 before rallying strongly to 1.2169 offshore. The euro then reversed the rally and, in a technically driven move, US strength returned to take the euro down to 1.2090 at the close. The Japanese yen opened at 109.30 and in fairly listless trading drifted sideways until London trading, USD/JPY then sold off to an intraday low of 108.66, again a technically driven move. Sterling
remained subdued on Thursday, confined to a 1.8180 to 1.8230 range for the majority of the day with a very brief spike to 1.8290 offshore; it opens at 1.8210 today.
Japanese April machinery orders contract 1%.
This was slightly better than expectations. The overall number was weighed down by a 6.9% fall in non-manufacturers' orders. Manufacturers and overseas orders recorded healthy increases.
US Jun Philly Fed weak.
The -2.2 result was the weakest Philly Fed number since April 2003 but the employment component was strong.
US May housing start and permits weaker than expected.
The monthly changes were roughly as expected but with the April numbers revised lower, the starts number came in at an annualized 2009k and the permits at 2050k.
US initial jobless claims roughly as expected, at 333k.
Eurozone CPI weaker.
The monthly number came in at a weaker than expected 0.2% (mkt f/c 0.3%) sending the annual rate back below the ECB's 2% target (at 1.9%).
UK retail slows.
While the monthly number came in at an as expected 0.1%, back revisions meant the annual number is now down to just 1.3%, the lowest read since Jan 1999.
Country Release Last Forecast
Aust May Imports (Customs Basis) AUDbn 12.6 n/f
US Q1 Current Account Deficit USDbn -187.9 -188.0
Jun UoM Consumer Sentiment (Prelim) 86.9 90.0
Eur Apr Industrial Production -0.2% 0.6%
Can Apr Wholesale Sales 0.5% 0.6%
Latest Research papers/Publication
NZ Weekly Forex Outlook (13 June)
NZ Q1 Terms of Trade Review (10 June)
NZ Weekly Interest Rate Wrap-up (10 June)
RBNZ June MPS Review (9 June)
Taking stock - the sequel (8 June)
RBNZ Hot Points (7 June)
These papers/publications are available on Online Research on
Westpac Institutional Banks website (www.wib.westpac.co.nz)
Westpac Banking Corporation ABN 33 007 457 141 incorporated in Australia (NZ division). Information current as at 24 May 2005. 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 Westpac'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. © 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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