Tuesday November 8, 2005 - 20:26:02 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex: Westpac Institutional Bank Morning ReportNew Zealand Dollar: NZD finally bounces
What started as a relatively quiet morning yesterday, turned into a busy day as the NZD fell through key support at 0.6780. The currency opened up around 0.6790 and looked to be trading in a tight range above support at 0.6780. In the early afternoon this gave way as the USD was brought across the board. The NZD fell quickly to 0.6740 in the first half hour, but managed to stabilise and close the local session higher. This strength continued overnight as the NZD followed other major currencies higher, managing to claw its way back over 0.6800. A 0.6836 high was posted late last night, the NZD opens just below this level today.
Australian Dollar: AUD find friends overnight
The AUD looked strong yesterday morning, opening around 0.7320 and rising to 0.7335 within the first few hours of trading. From there however, it was all downhill in the local session with early afternoon AUD sinking through support at 0.7310, in a sharp move lower. The currency bottomed out at 0.7285 but managed a slight recovery into the close. Like NZD, the AUD benefited on the back of major currencies overnight, climbing above yesterday's high to post 0.7359 early this morning. It opens today around 0.7350.
Major Currencies: Dollar upward momentum fading?
The USD reached a two year high against the euro yesterday, trading 1.1711 after breaking through key support levels. The dollar lost some ground however, to finish the session around 1.1785. The euro's overnight weakness was partly driven by another night of rioting in France but analysts say market momentum was the key driver. The euro's recovery was brought about by a market that was very short euro, forcing investors to cover their long dollar positions. The USD also lost ground against the yen, reaching a session low of 117.11 as investors pared back heavy bets vs JPY taken over recent months.
Minor updates on the US consumer.
The weekly retail reports were mixed. The Redbook slowed from 1.3% to 0.5% in the first week of Nov, but chain store sales jumped 1.0%, their best result for months, as falling gasoline prices boosted other spending. Also, the IBD/TIPP optimism index rose from 42.0 to 48.6 in Nov, which suggests that lower gasoline prices are helping confidence recover.
Canadian housing starts fell 10% in Oct,
reversing their 12% rise in Sept. The trend here is now downward, although permits data suggest further declines won't be steep.
UK retailing slowly improving.
The British Retail Consortium reported the third consecutive month of gradual improvement in retail activity, in October, adding to the case against a further rate cut from the Bank of England later this week.
Country Release Last Forecast
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%
Ger Annual Economic Report
UK Sep Global Trade Balance £bn -5.6 -4.8
Oct BRC Shop Price Index
10 Nov NZ Q3 HLFS Employment 0.5% 0.4%
Q3 HLFS Unemployment Rate 3.7% 3.7%
Aust Oct Employment chg -42.3k 25k
Oct Unemployment Rate 5.1% 5.1%
Latest Research papers/Publication
NZ Q3 QES and LCI Review (8 November)
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)
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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