Wednesday July 20, 2005 - 00:50:44 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex: Westpac Institutional Bank Morning ReportNew Zealand Dollar: NZD controlled by USD direction
NZD/USD opened on its highs yesterday morning and proceeded to trade a tight range throughout the local session. The currency was well supported around 0.6760 but was unable to push higher than 0.6780 as direction continued to come from greenback sentiment. Overnight selling of the currency saw the NZD lower but it bounced off support at 0.6720. It opens slightly higher this morning around 0.6740.
Australian Dollar: AUD opens strongly
The local market opened to a stronger AUD yesterday morning but slowly softened throughout the morning. By early afternoon the AUD was testing support at 0.7520 but bounced off this level and tried to reach 0.7540 again. AUD/USD tested 0.7520 again at the sessions close and this time it broke though and the AUD closed in on 0.7500. A stronger greenback overnight on expectations of an upbeat Greenspan testimony saw AUD/USD push lower and it posted an intraday low of 0.7480. The currency has recovered slightly and opens just above 0.7500 this morning.
Major Currencies: USD bought pre Greenspan testimony
The US dollar was bought across the board in early offshore trading last night as most players believe that Fed Chairman Alan Greenspan will give an optimistic assessment of the US economy on Wednesday. The dollar went to 14-month highs against JPY and CHF
of 112.98 and 1.3081 respectively, before selling off in the New York session. The euro
was sold down to a low of 1.1953, its downward path briefly reversed after a positive German investor confidence number. With the euro then oversold on the low, traders steadily brought it back up to the 1.2030 level where it opens this morning. GBP
largely followed the euro during the overnight session, and opens around 1.7390 today.
Bank of Japan minutes: two hawks in the nest.
This title is a little bit cheeky, but probably reflects the market's mood on the matter. As expected, there were two dissenters regarding the "on hold" policy decision, both of whom wanting a formal reduction in the current account balance target. Fukuma and Mizuno can be counted upon to continue their line of argument for some time, given they are emphasizing the reduction in systemic risk for the banking system and market efficiency considerations, rather than championing tighter policy per se.
US housing starts flat in June.
The housing data were stable rather than strong. Permits jumped a little more than we expected in June but starts were flat. We had expected more from starts, given construction jobs growth, improved weather conditions, June's near 6 year high for the National Association of Homebuilders' market index, and the generally ebullient nature of current housing related chatter. If ever there was a number ripe for an upward revision in a month's time this is it! As the data stand, the volatile multiple dwelling category was the strongest in June, up 6.5% for permits and 14.2% for starts,\ whereas single family permits rose just 1.3% and single starts slipped 2.5%.
Nondescript US weekly retail sales data:
chain store sales rose 0.3%, the third weekly gain in a row: summer goods were cited as strong. The Redbook retail average was up 0.2%, unchanged from the prior week.
German ZEW survey jumps from 19.5 to 37.0 in July.
The ZEW survey shows that German analysts have been enthused by the recent run of less week activity data, the weaker euro and the prospect of a changed political environment with federal elections now imminent. Clearly high oil prices were not enough to dent this optimism. Also, there was a modest 0.3% fall in Euroland IP in May: an example of this "less weak" data: although the third decline in four months, at least it failed to fully reverse the prior month's rise.
Country Release Last Forecast
Aust May WBC-MI Leading Index %annsd 1.3% n/f
US Greenspan Semi-Annual Testimony
Eur May Trade Balance EURbn nsa 1.3 n/f
UK Jul BoE MPC Meeting Minutes
Jun M4 Money Supply %yr 11.6% 11.8%
Can May Wholesale Sales 0.9% 0.5%
Jun Leading Index 0.3% 0.4%
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)
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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