Tuesday October 11, 2005 - 20:58:46 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex:Westpac Institutional Bank Morning ReportNew Zealand Dollar: NZD data fails to inspire
The NZD fell overnight following a quiet day during the local session yesterday. After opening around 0.6975 the NZD traded in a range of 0.6972-0.6986. The released survey of business confidence failed to inspire any notable buying, however the NZD did manage a rally to 0.6990 late in the day. From there NZD was sold steadily to a low of 0.6916 as USDs were bought across the board. The currency opens this morning around 0.6925, having managed a slight recovery.
Australian Dollar: AUD falls overnight
The AUD traded in a tight range on Tuesday as most in the market awaited a speech from RBA’s Stevens, expected to include inflation concerns. AUD opened the day around 0.7585 and gradually crept lower to 0.7567 before closing the local session slightly higher. After the speech, which proved uneventful, the AUD followed other major currencies lower and bounced twice off 0.7509. From there the AUD managed a slightly recovery and opens this morning around 0.7520.
Major Currencies: Dollar firms on US interest rate outlook, euro dips
The USD climbed to its highest level against the yen in 17 months yesterday in a broadbased rally on expectations of hawkish minutes from the Fed’s last policy meeting. The USD also found support from a report that China's trade surplus last month unexpectedly dropped to its lowest number since April as the pace of export growth cooled. The euro fell below the psychological 1.2000 level on concerns the coalition will limit Germany’s new leader Angela Merkel's ability to create jobs. GBP slid to a fresh 10-week low at 1.7444 in wake of expectations that UK interest rates would be cut sooner rather than later. JPY opens this morning near the session high around 114.55, and the euro opens near its session low around 1.1983.
Japanese Aug machinery orders bounced 8.2%.
This was a broad based gain, with all the major categories (ex-overseas) contributing strongly. Non-manufacturing orders have risen in six of the last eight months. The fundamentals are highly supportive of capital spending, which is currently the major source of GDP growth. However, capex is still running behind corporate cashflow, implying that the banks will not find much direct benefit from this up-cycle, at least for the time being.
US consumer uptick showing through?
Chain store sales showed a modest 0.2% rise in the week ended 8/10. That's the third rise in a row, though not yet enough to offset the string of weekly declines between late Aug and mid Sep, largely hurricane related. However the Redbook retail average accelerated a little in the first retail week of Oct, from 0.4% to 0.7%, thanks to cooler weather boosting back to school sales. The first of the monthly consumer confidence indicators for Oct, the IBD/TIPP optimism index, showed a rise from 41.2 to 42.0. That's a minimal rebound after the near 10 pt plunge in Sep to an all-time low.
Canadian housing data update.
Last night's data showed: a broad-based (across regions and also including both houses and blocks of flats) 11.8% bounce back in housing activity in Sep; and house price growth rising back to 0.4% in Aug, just a touch below recent trend.
US trade deficit widens to £5.6bn in Aug.
The visible trade deficit widened in Aug, and was revised up by more than £400mn in July. As such the deficit was substantially wider than even Westpac's top of the market forecast range £5.2bn. The wider deficit reflected a rare shortfall on the oil account, due to temporary disruption in the North Sea oil fields which also hit the industrial production data for August last week. However the non oil deficit narrowed by around £500mn. The upward revision to July was due to a more complete assessment of the impact of VAT fraud (related to the import and export of computer parts and mobile telephones). The trade data are based in part on VAT tax forms, which have been understated as part of this fraud. Both of these factors will tend to act as a drag on GDP growth in Q3.
Country Release Last Forecast
12 Oct Aust Oct WBC-MI Consumer Sent. -13.3% n/f
US Fedspeak: Greenspan, Olsen
Jpn Sep Consumer Confidence 48.4 48.7
UK Sep Unemployment Change 1.6 3.0
13 Oct Aust Sep Employment Chg 32.6k 8k
Sep Unemployment Rate 5.0% 5.0%
US Aug Trade Balance USDbn -57.9 -55.5s
Latest Research papers/Publication
• NZ Q3 QSBO Review and OCR Outlook (11 October)
• NZ Weekly Forex Outlook (10 October)
• NZ Weekly Interest Rate Wrap-up (10 October)
• NZ Q3 Employment Confidence Index (5 October)
• NZ Weekly Forex Outlook (3 October)
• NZ Weekly Interest Rate Wrap-up (3 October)
• Economics vs sentiment (29 September)
These papers/publications are available on Online Research on
Westpac Institutional Bank’s 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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