Thursday September 1, 2005 - 21:28:14 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex: Westpac Institutional Bank Morning ReportNew Zealand Dollar: NZD rockets through 0.7000 again
Despite starting spring in a low key fashion during our local session yesterday, the NZD was soon to receive a boost overnight care of a weaker USD. NZD/USD opened around 0.6950 yesterday morning and did not move outside a 26 point range during our day, consolidating its gains from the previous day. It was the offshore session that provided direction and shortly after the open the local currency began to rally. The NZD surged from around 0.6960 to eventually reach an intraday high of 0.7060 on the back of a combination of weak US data, continuing concerns on Hurricane Katrina and rocketing oil prices. The NZD has held its ground this morning and opens around 0.7050.
Australian Dollar: A strong start for September
After posting a solid gain the previous night, the AUD currency was happy to consolidate those gains during our day. The AUD opened around 0.7540 and ranged between 20 points for the remainder of the local session. An array of economic data was released in the local time zone and consisted of manufacturing conditions, house prices and business investment data and on average put on a strong show. Despite this, little reaction was noted in the financial markets. Like the NZD, the AUD was another benefactor of broad USD weakness in the offshore session. The currency surged over 70 points to post a high of 0.7638. The currency opens around 0.7615 this morning.
Major Currencies: Dollar down as data weakens
The US dollar extended declines on Thursday after a second day of poor US data. The euro
was up over 1% in the overnight session, and once resistance at 1.2475/80 was breached, the European currency went on to make a 1.2525 high. Sterling
is 2 cents higher than yesterday afternoon, its biggest one-day gain against the dollar since May 2004. Now at two-month highs, Sterling opens this morning around 1.8330. JPY
strengthened 0.5% against the USD, its gains muted as traders worry about the Japanese economies exposure to oil price rises.
US ISM manufacturing falls 3 pts to 53.6 in Aug.
The ISM manufacturing reversed its July rise in August, mainly due to less strong readings for new orders and production. It is likely that concern about rising energy prices, which fell in the stronger July ISM but surged in August's weaker report, is a big factor at play here. If so, expect the Hurricane Katrina-induced energy price surge to engender further survey weakness in September.
Other US data:
Construction spending revisions were dramatic, but left the recent trend a little soft, consistent with slower construction jobs but at odds with record new home sales. The sluggish pending home sales trend suggests that June's record existing home sales reading won't be beaten soon. Personal income grew less than expected due to softer proprietors' income, while spending was boosted by auto sales. The core PCE deflator was soft at 0.1% in July, with the market based core PCE even softer at 0.0%. Initial jobless claims rose 3k to 320k last week.
The European Central Bank left rates unchanged at 2.0%
after last night's Council meeting. The ECB also published its revised staff economic projections, with growth revised down a little in 2005 and 2006, and inflation revised a little higher, due to oil.
Euroland PMI manufacturing slips from 50.8 to 50.4 in Aug.
Following on from the softer German IFO survey, the manufacturing PMI was also weaker, mainly due to Germany. We might be in the early stages of the recent upswing in European business surveys starting to reverse. However unemployment dipped to 8.6% in Euroland, outside the 8.7-8.9% range that has prevailed since 2003
The UK manufacturing PMI for Aug rose to 50.1,
above 50 for the first month since March. Revisions mean that new orders have now been in positive territory for three months running. This gives us some confidence that the recent run of less weak industrial production monthly data can continue in the third quarter. Also, Nationwide reported house prices down 0.2% in Aug, for a 2.3% yr annual rate.
Country Release Last Forecast
2 Sep US Aug Non-Farm Payrolls 207k 170k
Aug Unemployment Rate % 5.0% 5.0%
Jpn Aug Base Money %yr 1.5% n/f
Eur Jul PPI %yr 4.0% 4.1%
UK Aug Construction PMI 54.7 55.0
5 Sep NZ Q2 Wholesale Trade Survey 0.4% n/f
Aust Q2 Business Inventories 2.0% n/f
Latest Research papers/Publication
NZ Weekly Forex Outlook (29 August)
NZ Weekly Interest Rate Wrap-up (29 August)
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)
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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