Thursday November 10, 2005 - 00:22:47 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex: Westpac Institutional Bank Morning ReportNew Zealand Dollar: NZD grinds higher
Yesterday was a day of consolidation for NZD, as it continued to edge upwards after falling to new lows in recent days. After opening around 0.6820 it traded higher in the local morning session to 0.6838, but sold off in the afternoon as USD buying pushed most major currencies lower. The London session pushed the NZD to its daily high of 0.6849 as positive sentiment took hold. Mildly positive US data then pushed the NZD lower, however with buying interest still lurking, the NZD looks strong opening around 0.6845.
Australian Dollar: Late bid supports AUD
A relatively quiet local session yesterday for the AUD. Opening around 0.7345, it ground lower to close around 0.7335, choppy trading being the main order of the day. From there the London session pushed AUD to its daily low of 0.7319, but it has managed to recover as buyers entered the market. Early this morning there has been good interest in AUD, pushing it up to 0.7370. It opens slightly below that level this morning.
Major Currencies: Markets fairly quiet ahead of US trade data
Major currencies moved in narrow ranges ahead of Thursday’s US trade report for Sep. The USD climbed modestly against the euro after short-term traders failed to sell the USD through technical levels forcing them to buy it back. The euro came under some pressure overnight on reports the ECB could change rules for accepting debt collateral from member states that don’t meet a minimum credit rating but ECB President Trichet alleviated that concern, noting that those rules have been in place since 1999. Against the yen, the dollar dipped briefly below 117.00 due to traders unwinding yen negative positions in the currency futures market before recovering to finish the session around 117.50.
US wholesale inventories rise 0.6% in Sept.
The strongest rise in wholesale stocks since April could contribute to an upward revision to Q3 GDP growth.
More hawkish speak from Axel Weber, Bundesbank chief and ECB Council member.
He said that risks to price stability have increased in recent weeks, and argued that focussing on low core inflation was not appropriate. He says he is assuming the oil price shock is permanent. Although ECB president Trichet today said the Bank's position on rates has not changed since last week's meeting (when rates were "appropriate"), it does sound like Weber will be arguing the case for a rate rise before too long.
UK trade deficit £5.4bn in Sep.
The visible trade deficit narrowed in Sep but was revised higher in Aug, so there is little prospect of a revision to Q3 GDP growth from this source. Note that export volume annual growth is currently running at around 10%, well above imports on 6%, but because the level of imports is that much higher than exports, those growth rates aren't enough to narrow the deficit in trend terms.
Country Release Last Forecast
NZ Q3 HLFS Employ/Unemploy 0.5%/3.7% 0.4%/3.7%
Aust Oct Employment/Unemploy -42.3k/5.1% 25k/5.1%
Nov MI Inflationary Expectations 5.2% n/f
US Sep Trade Balance USDbn -59.0 -62.5
Oct Import Prices 2.3% -0.5%
Initial Jobless Claims w/e 5/11 323k 315k
Nov UoM Consumer Sent (Prelim) 74.2 80.0
Oct Federal Budget USDbn -57.3 -51.5
Jpn Sep Machinery Orders 8.2% -6.0%
Eur ECB Monthly Bulletin
UK BoE Repo Rate Decision 4.5% 4.5%
Can Sep New Housing Price Index 0.4% 0.3%
Sep Trade Balance CADbn 5.6 6.3
G7 OECD Leading Index 102.3 n/f
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)
• NZ Weekly Forex Outlook (25 October)
• NZ Weekly Interest Rate Wrap-up (25 October)
• RBNZ October OCR Preview (19 October)
• NZ Economic Overview October 2005 (18 October)
• NZ Q3 CPI Review (17 October)
• NZ Weekly Forex Outlook (17 October)
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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