Monday November 7, 2005 - 19:57:30 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex: Westpac Institutional Bank Morning ReportNew Zealand Dollar: NZD continues decline
The NZD hovered close to its six week lows during the local session, and in a typically quiet Monday there were few significant buyers or sellers. The NZD traded a tight 0.6818 - 0.6843 range and closed near the upper end of this range. The strong USD sentiment continued overnight with the NZD selling off mildly. It eventually bounced off support at 0.6780 and opens 10 points higher this morning.
Australian Dollar: AUD trades tight range
It was a choppy day's trading within a tight range for the AUD yesterday. During the local session AUD washed around in a 0.7318 - 0.7342 range, largely moving in the same direction as NZD. Overnight trading saw the AUD sold to 0.7306 as the strong USD sentiment from last week continued. However the AUD recovered somewhat, buoyed by a positive interest rate outlook, and opens around 0.7330 this morning.
Major Currencies: Dollar bulls forge ahead
In a session bereft of major data the USD still managed to reach a new 18 month high against the euro of 1.1776, driven on by bullish sentiment on the back of higher US interest rates versus stagnant rates in the euro zone. The next key support level for the euro is 1.1759, which would be a two-year low if it is reached. Option barriers sitting slightly below that level would be defended. Against the yen, the dollar retreated from a 26 month high of 118.40 seen in the Asian time zone to an intra-day low of 117.46 after profit taking. This morning the JPY opens around 117.59 and the euro 1.1805.
No US data to report.
Canadian building permits fall 5.3% in Sept.
An as expected decline in non-residential permits, reversing part of their August surge, was behind the fall in total permits in September. Residential permits rose 3.2%, though this was mostly due to a jump in multiples, with single family permits up just 0.8%. The total value of permits in September was C$5.144bn, still very high and indicative of plenty of construction activity in the pipeline.
German industrial production rises 1.2% in Sept.
There was yet more evidence of re-emerging industrial strength in Germany, with IP bouncing back after August's decline. The rise was broad-based across capital, intermediate and consumer goods. Business surveys and surging orders point to further output gains in coming months. However the evidence on the consumer remains mixed at best. Euroland retailing, down 0.4% in Sept, has not managed to post back to back monthly gains since late last year; the national breakdown shows sales in Germany especially weak. One possible positive, though, is that the retail PMI for Euroland hints at a stronger retail report for October.
UK industrial production up 0.5% in Sept,
but the rise in industrial production was due to a surge in North Sea oil output, after temporary oil rig disruptions in the summer. However manufacturing sector output slipped yet again in September, in contrast to the manufacturing PMI survey which has been stronger of late. The September decline was broad-based, led by chemicals but with softness in engineering, food, textiles and other. Still, with manufacturing now less than one fifth of the UK economy, this soft industrial sector performance is unlikely to have much impact on the Bank of England monetary policy committee this week, given recent less weak signals from housing and even retailing. We expect rates to remain on hold until well into next year.
Country Release Last Forecast
8 Nov NZ Q3 Labour Costs (Priv, Ord Time) 0.6% 0.5%
Q3 Quarterly Employment Survey 1.9% 0.6%
Aust Oct NAB Business Survey 11 n/f
UK Oct BRC Retail Sales Monitor
Can Oct Housing Starts '000 230 225
9 Nov Aust Sep Housing Finance -0.2% 3.0%
Nov WBC-MI Consumer Sent -1.6% n/f
US Sep Wholesale Inventories 0.5% 0.2%
Latest Research papers/Publication
NZ Weekly Forex Outlook (7 November)
NZ Weekly Interest Rate Wrap-up (7 November)
NZ net migrant flows close to trough (4 November)
NZ Q3 labour market preview (3 November)
NZ Weekly Interest Rate Wrap-up (1 November)
NZ Weekly Forex Outlook (31 October)
RBNZ October OCR Review (27 October)
NZ Weekly Forex Outlook (25 October)
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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