Monday July 18, 2005 - 21:53:28 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex: Westpac Institutional Bank Morning ReportNew Zealand Dollar: Japanese holiday and no data bores NZD Major
NZD/USD opened quietly yesterday and traded around the mid 0.6700 area for much of the local session. With no economic data on the day and Japan on Marine Day holiday trading conditions were thin. The NZD stretched its legs slightly in the early afternoon pushing through 0.6740 which then became technical support towards the close of the local session. Early trading in the offshore session saw the currency sold off again to find support back around 0.6720. US data released saw the NZD rally to an intraday high of 0.6794 as the market was a little disappointed with the make up of the data. The currency opens around 0.6670 this morning.
Australian Dollar: AUD locked under 0.7500
A lack of themes during the local AUD session yesterday saw the currency trade a tight 25 point range with 0.7500 being strong resistance on the topside. Like the NZD, the AUD drifted in what was very light trading conditions. There was some talk around recent AUD uridashi issuance with AUD1.5bn hitting the wires within the last few days. The offshore session provided more direction and saw AUD/USD push through 0.7500. This move was initially driven by the release of the US TIC data however offshore buying continued and the AUD eventually posted an intraday high of 0.7550. The currency has held onto these gains and opens around 0.7540 this morning.
Major Currencies: Choppy conditions on mixed data
Sterling lost ground while the euro was largely flat against the US dollar overnight in largely choppy trading conditions. After British house price data showed the weakest gain in 10 years, Sterling fell to a 3½ month low against the euro to 69.14, and hit an overnight low of 1.7453 against the USD. Most major currencies then recovered slightly after US foreign capital flows showed net foreign selling of US equities. The euro traded up to a 1.2088 high on the release, but has tailed off since and opens around 1.2050 this morning. A holiday in Japan meant thin trading conditions for JPY, but it did manage to strengthen slightly against the dollar and opens this morning around 111.90.
Foreign purchases of US securities amounted to a net $60bn in May,
exactly in line with Westpac's forecast and close to consensus of $55-60bn. This is a clear improvement on April's $47.8bn but still well short of the Jan-Feb average of $88bn. This hints that May's strong rise in the USD was not driven to any unusual degree by foreign investment in US long term securities.
Euroland inflation unrevised at 2.1% yr in June.
The core rate in June was 1.4%, the low end of this year's 1.4-1.6% range.
Country Release Last Forecast
19 Jul US Jun Housing Starts 0.2% 3.5%
Jun Housing Permits -4.0% 1.5%
Jpn Bank of Japan Minutes
Eur May Industrial Production 0.6% -0.2%
Ger Jul ZEW Economic Sentiment 19.5 22.0
20 Jul Aust May Leading Index %annsd 1.3%
US Greenspan Semi-Annual Testimony
Eur May Trade Balance EURbn nsa 1.3
UK Jul BoE MPC Meeting Minutes
Latest Research papers/Publication
NZ Weekly Forex Outlook (18 July)
NZ Weekly Interest Rate Wrap-up (18 July)
NZ Q2 CPI Review (14 July)
NZD: What really drives the currency? (14 July)
NZ Q2 CPI Preview (11 July)
NZ Weekly Forex Outlook (11 July)
NZ Weekly Interest Rate Wrap-up (11 July)
NZ Q2 Employment Confidence Index (6 July)
NZ Economic Overview July 2005 (4 July)
These papers/publications are available on Online Research on
Westpac Institutional Banks website (www.wib.westpac.co.nz)
(Previous days closing rates)
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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