Thursday November 10, 2005 - 20:43:57 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex: Westpac Institutional Bank Morning ReportNew Zealand Dollar: Positive data pushes NZD higher
The NZD continued to gain yesterday after positive local data brought fresh buying interest. After opening around 0.6830 the NZD traded in a tight range until mid morning when the Q3 employment data was released. Quickly following this was a short squeeze as the currency jumped higher to 0.6870 and held onto its gains for the rest of the local session. Further buying overnight pushed the NZD through 0.6900 briefly, before being sold off sharply in the face of weaker than expected US data. The currency opens around 0.6880 this morning.
Australian Dollar: Sour data sees AUD sold
What began as a positive session for the AUD, ended in tears as a weak data stream and generally poor sentiment saw the currency steadily sold throughout the day. The AUD opened around 0.7375 and managed to largely hold its own until Oct unemployment data came out softer than expected. This saw the AUD quickly sold to 0.7325 where it remained for the rest of the local session. The currency was then brought in choppy London trading to an overnight high of 0.7360 before USD buying hit major currencies, then it was punished back to 0.7300. It opens around 0.7320 this morning.
Major Currencies: Little market reaction to record trade deficit
The dollar initially lost ground against the euro and yen after a record US Sep trade deficit was reported but managed to rally back to reach a session high of 1.1725 against the euro and 118.19 against the yen. The USD’s bounce back was helped by a sharper than expected rise in Uni of Mich consumer sentiment reinforcing speculation the Federal Reserve will keep raising rates. The USD opens this morning against the euro and yen near its highs reached overnight, around 1.1730 and 118.00 respectively.
Japanese machinery orders fell 10% in Sep,
slightly more negative than expectations. It does, however, leave Q3 up 2.1%
Upcoming Events Latest Research Papers/Publications
exceeding METI's forecast.
US Sep trade balance deep in the red.
West Coast container data had hinted that the deficit could be on the large side of expectations and that was certainly the case, with a record deficit of $66.1bn against the consensus $60.3bn. This record deficit was brought about by a combination of Gulf trade disruption (the region’s deficit was larger than usual), spiking oil prices, strong import demand, and a strike at Boeing. Though trade in the Gulf region will still have suffered some disruption in October, oil and aircraft at least should see the deficit narrow ahead. Reinforcing that view, import prices for October eased back 0.3% on lower oil prices, much as expected but reversing only a fraction of the hurricane-driven 2.3% spike in Sep. The September goods trade balance was around $2bn greater than assumed in the initial Q3 GDP estimate, implying trade will take a bigger bite out of growth when revisions are published.
US consumer sentiment recovers.
The preliminary November read improved 5.7 points off its 13-year low to 79.9, broadly in line with our expectations but a more robust outcome than widely expected. The rebound was centred in the current expectations component, up 9 points and suggestive that US consumers are starting to overcome the hurricane-related whammy - aided by lower fuel prices.
US initial jobless claims roughly stable.
New claims for w/e Nov 6 totalled 326k, up 3k from a week earlier - but settling near their pre-Katrina level. Continuing claims also edged up, though the previous week’s total was revised down.
US Federal budget deficit shrinks.
The October deficit of $47.2bn was milder than expected.
UK repo rate unchanged at 4.5%, as expected.
Canadian data on strong side.
September’s trade surplus of C$7.0bn exceeded the C$5.8bn expected; house prices grew 0.6%m/m in Sep against 0.3% expected.
Country Release Last Forecast
11 Nov US Veterans’ Day Holiday
Jpn Q3 GDP %qtr 0.8% 0.3%
Oct Corp Goods Prices %yr 1.7% 1.6%
14 Nov UK Oct Producer Prices %yr 2.1%
Can Sep Auto Sales -7.9% -8.0%
15 Nov NZ Q3 Retail Trade %qtr 1.3% 1.6%
Sep Retail Trade %mth 0.2% flat
Latest Research papers/Publication
• NZ Housing Equity Withdrawal (10 November)
• NZ Q3 HLFS Review (10 November)
• 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)
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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