Monday June 20, 2005 - 00:11:53 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex: Westpac Institutional Bank Morning ReportNew Zealand Dollar: Quiet day sees NZD lower
The NZD opened around its highs on Friday morning and immediately began to soften. A few concerted spikes towards 0.7160 were noted around midday however it was not enough to stop the currency sinking to 0.7120 where it finally found support. However, trading towards the end of the local session saw NZD/USD regain some ground. The offshore session provided more direction as the spotlight went on the US current account deficit. A record US deficit saw the NZD benefit as the currency surged to an intraday high of 0.7186. However this level was relatively short lived and the currency softened to find support at 0.7140. It opens around 0.7150 this morning.Upcoming Events
Australian Dollar: AUD struggles first up
After posting a high of 0.7744 on Thursday, the AUD struggled to make fresh headway during Friday's local session. The currency was contained within a narrow 0.7717 to 0.7741 range as the market looked to sell AUD/USD at these levels. Data on the day consisted of May Merchandise imports which posted a rise of 2.0% during the month which was consistent with May's international trade balance. As expected the offshore session provided much needed volatility and the AUD finally broke through resistance at 0.7740 on news of a record current account deficit. AUD eventually reached an intraday high of 0.7783 aided by a strong rally in the euro. The currency opens around 0.7765 this morning.
Major Currencies: Dollar sinks as deficit widens
Major currencies gained ground against the US dollar on Friday in the New York session, a bigger than expected current account deficit triggering the selling. The euro
rallied to a 1-week high of 1.2289, a gain of 1.4%, and two cents above its 9-month low hit on Wednesday. Sterling
gains against the dollar were muted by selling of GBP against the euro, as it ground to a 1.8308 high. The Swiss Franc
gained more than 1% after positive comments from the Swiss National Bank, and then helped by the US data to reach its strongest level for the week at 1.2565. Elsewhere there was a call from the Asian Development Bank for China to adopt a trade-weighted basket exchange rate, rather than being strictly tied to the US dollar.
US Q1 current account deficit new record.
The $195.1bn number was worse than expected (mkt f/c $190bn), and represented a record 6.4% of GDP. The "surprise" element was a further deterioration in unilateral transfers (i.e. the trade
US Michigan confidence survey strong.
The 94.8 result was significantly stronger than the 88.8 forecast, and the highest reading since January.
Eurozone industrial production strong.
The April number came in at a stronger than expected 0.6% (mkt f/c 0.1%) off the back of a technical recession in the industrial sector over Q4 2004 and Q1 2005.
Country Release Last Forecast
20 Jun Aust Q1 Dwelling Unit Commence. 0.2% -2.0%
Treasury Secretary Speech 6pm
US May Leading Index -0.2% -0.3%
Jpn Bank of Japan Minutes
21 Jun Eur Q1 Labour Cost Index %Yr 2.4% 2.2%
Ger Jun ZEW Survey Index 13.9 17.2
22 Jun NZ Q2 Consumer Confidence 126.7 n/f
Latest Research papers/Publication
NZ Q1 GDP Preview (17 June)
NZ Q1 Current Account Preview (17 June)
M&A Update - More support for the NZD (17 June)
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)
These papers/publications are available on Online Research on
Westpac Institutional Banks website (www.wib.westpac.co.nz)
Latest Research Papers/Publications
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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