Tuesday June 21, 2005 - 21:30:15 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Westpac Institutional Bank Morning ReportNew Zealand Dollar: NZD follows overseas drivers
Having failed to break higher through 0.7200 on Monday, the NZD drifted lower during the local session. A month on month decline of 2.0% in NZ house sales in May drew little reaction and a tight range of 0.7130 - 0.7166 was defined on the day. The NZD followed overseas drivers during the offshore session, initially moving lower in line with the euro, as the single currency came under pressure following a surprisingly aggressive rate cut by the Swedish Riksbank. However, NZD/USD recovered as the USD retreated as rumours resurfaced of an imminent press conference regarding a possible Yuan revaluation. The market opens this morning at 0.7175. In data released, the Westpac-McDermott Miller consumer confidence index fell to 120.2 in June from 126.7 in the March quarter its lowest level in two years.
Australian Dollar: AUD above 0.7800 as US gains reverse
A muted domestic session was also seen in the AUD, following the currency's inability to break higher through 0.7800. Although the market drifted lower intraday, domestic buying was noted below 0.7750 and the market settled into a tight 0.7746 - 0.7769 range. Initially, losses deepened in the offshore session, however, with the USD gaining against the euro, as it was suggested that the ECB might follow the Riksbank in cutting rates. The AUD reversed early losses, however, in line with a recovery in the single currency and USD/JPY selling ahead of 110. This reversal has seen the AUD trade higher through 0.7800 and the market opens this morning at 0.7805.
Major Currencies: USD loses ground on technical and rumour led trade
The USD gave up some of yesterday's gains in technically driven trade amid renewed speculation China might soon loosen its currency controls. The USD initially rallied against the euro
after a surprise 50bps rate cut by the Swedish central bank fuelling expectations the ECB might be about to follow suit. However dollar gains were capped as the greenback ran into heavy EUR/USD buying at around 1.2070 taking the euro to a 1.2181 high where it opens this morning. The yen was bought overnight on further Chinese revaluation rumours, taking the USD/JPY through 109.00 to 108.25 where it opens this morning.
German sentiment improves.
The June ZEW analyst survey of economic sentiment improved to 19.5 from 13.9, essentially reversing the preceding months decline. However, sentiment on this measure is still around the level that prevailed at the end of 2004 when the German economy ground to a halt. The Ifo business climate index (due 27th) will give another update on sentiment: in the past 2 months it has been lower than at any time over 2004.
Eurozone labour costs jump.
Q1 labour costs jumped to 3.1% y/y from 2.5%, markedly ahead of the 2.2% polled expectation.
Country Release Last Forecast
22 Jun Aust Apr WBC-MI Leading Index 0.0% n/f
May Motor Vehicle Sales 2.0% -1.5%
Jpn May Trade Balance ₯bn 712 680
UK Jun BoE Policy Meeting Minutes
23 Jun NZ Q1 Current Acct Qtr NZDmn -3,108 -1,121
US May Existing Home Sales 4.5% 1.0%
Initial Jobless Claims w/e 19/6 333k 326k
Jpn Apr Tertiary Activity Index -1.0% 0.8%
Latest Research papers/Publication
NZ Q2 Consumer Confidence (22 June)
NZ Weekly Forex Outlook (20 June)
NZ Weekly Interest Rate Wrap-up (20 June)
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)
RBNZ June MPS Review (9 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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