Wednesday August 24, 2005 - 22:44:55 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex: Westpac Institutional Bank Morning ReportNew Zealand Dollar: NZD defies the odds
NZD/USD looked like it was heading lower yesterday but again showed its resilience and rallied to a weekly high. The Japanese strength that supported the NZD earlier in the week suddenly deserted the market amongst rumours of Japanese bank stock downgrades. This weighed on the Asian currencies and as a result pushed NZD/USD from 0.6983 to 0.6941 during the local session. The NZD's recovery came via poor US economic data and stop-loss buying in the euro. US durable goods orders were significantly worse than expected, this lead to a sharp rally in the euro that took the NZD with it. NZD/USD rallied from 0.6937 to 0.7002 before settling at 0.6980 this morning.
Australian Dollar: Volatility picks up in the AUD
In a week that has been thin on action, Wednesday provided some welcome volatility for AUD/USD. The AUD was content to range trade for much of the domestic session, it was confined to a 0.7545 to 0.7565 range by the contrasting forces of a buoyant USD and firmer commodities prices. Local data suggested the economy is growing more steadily in Q2 than expected: Q2 Construction Work rose 4% against an expected 0.4% fall. The construction activity will add 0.4% to quarterly GDP growth. However USD strength won out early London time taking the AUD down to 0.7513. This was reversed following the poor US data and the AUD rebounded back to 0.7575, a seven-day high. The AUD opens today at 0.7560.
Major Currencies: Euro moves higher on disappointing US report
The USD weakened against the euro during Wednesday's offshore session after a worse than expected report on US durable goods orders sparked a USD sell-off Despite record US new home sales for July, traders sold USD's following the disappointing 4.9% fall in durable goods orders from June to July triggering stop-loss euro buy orders above 1.2250 resistance. The euro rallied to a one-week 1.2280 high shortly after the report and opens this morning near its highs at around 1.2270. The yens
recent broad appreciation was reversed on Wednesday, as the USD made small gains against the Japanese currency up to 110.74. Also, crude oil contracts rose to a new record high of $67.40 per barrel.
US new home sales jump 6.5% in July,
yet another record high, making it three record sales months in a row. This contrasts with the fall in existing home sales reported for July, suggesting that it might be
premature to talk about the imminent end of the US housing boom.
However the price data were very soft, with median new house price
inflation plunging from 7.7% yr in May to -4.0% yr in July.
US durable goods orders fall 4.9% in July,
Euroland industrial orders jump 3.1% in June,
twice as big as expected, and May was revised from a 1.5% fall to almost flat. Hence this is a very strong report, continuing the flow of up-beat data that points to a solid bounce in Q3 GDP growth, following Q2's lackluster 0.3% outcome. Also, German inflation looks like edging lower in August from Jul's 2.0% yr outcome, based on preliminary data from five states.
Country Release Last Forecast
NZ Jul Merchandise Trade Bal NZDmn -522 -470
US Initial Jobless Claims 316k 310k
Jul Help Wanted Index 38 38
Jpn Jul Trade Balance ₯bn 694 570
Ger Aug IFO Business Climate 95.0 95.0
UK Aug House Prices, Nationwide BS 0.2% n/f
Q2 Business Investment 0.1% n/f
Jul BBA Mortgage Data
Latest Research papers/Publication
NZ Superannuation Fund: An Update (24 August)
NZ Weekly Forex Outlook (22 August)
NZ Weekly Interest Rate Wrap-up (22 August)
Pre-election Economic and Fiscal Update (18 August)
NZ Weekly Interest Rate Wrap-up (16 August)
NZD: A Commodity Story (15 August)
NZ Weekly Forex Outlook (15 August)
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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