Thursday November 17, 2005 - 20:56:53 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex: Westpac Institutional Bank Morning ReportNew Zealand Dollar: Rugby news lifts NZD
The NZD stuck within a familiar range in both domestic and overnight sessions as yield related demand balanced out a firm USD. The currency remained capped by strong resistance around 0.6870/80 as the USD held its ground after figures showed strong capital inflows continue to fund their giant trade deficit. The NZD has pushed up to the resistance level this morning at the same time news was received that NZ has been granted the rights to host the 2011 Rugby World Cup.
Australian Dollar: Soccer win produces market Hangover
The AUD steadied above 0.7300 yesterday, winning some support from a surge in gold, but retaining a heavier tone as USD strength dominates the market. In yet another directionless days trading the market was probably happy it was quiet as Australia nursed a massive hangover after their win over Uruguay to qualify for the Football World Cup. The AUD inched higher overnight and we open near overnight highs around 0.7340.
Major Currencies: USD pares recent gains after weak Philly Fed
The USD continued to pare recent gains during yesterday’s trade. Rumours of an emergency meeting on FX in China ahead of President Bush’s weekend visit to Beijing and disappointing data from the Japanese MoF regarding weekly overseas bond purchases cooled recent positive USD/Asia sentiment. USD/JPY lost ground from 119.30 to 118.73 locally, with the dollar’s decline deepening to 118.49 overnight. While soft US housing data was largely offset by better-than- expected jobless claims data, it was a weak Philadelphia Fed Index reading which exacerbated the USD’s overnight pullback. The euro squeezed higher from an overnight low of 1.1643 back above 1.17 and opens this morning on a firmer note at 1.1760. Sterling has also recovered from this week’s 2-year low at 1.7140 and is seen this morning around 1.7210.
US Nov Philly Fed index fell to 11.5 from 17.3.
The index slipped a little more than we expected, and was certainly softer than the neighbouring NY Fed (up from 12 to 23). But Philly typically moves like a see-saw, up one month, down the next, so in that context the Nov decline is no big deal. Indeed the activity detail was mostly favourable, with jobs and shipments very strong, and orders giving up just one third of their Oct jump. Prices paid were softer, due to energy, but prices received were resilient, implying some pricing power.
US industrial production rises 0.9% in Oct,
as Gulf Coast production came back on line in various sectors, and the Boeing strike ended. Unseasonally warm weather constrained utility output, but a 1.4% jump in manufacturing bodes well for a solid quarter for the industrial sector, consistent with the business surveys.
US housing starts fall 5.6%, permits fall 6.7%, in Oct.
Everyday there is a new indicator or anecdote pointing to slower activity in the sector. Last night saw the steepest monthly plunge in permits for six years, and a sizeable pull-back in starts. In both cases, the declines were prominent in the northeast and the west, whereas the south posted only modest falls, perhaps held up by reconstruction along the Gulf Coast. The declines were spread across both multiple and single family dwellings. Wet weather may have been a factor at play, but would not explain the permits slump.
US initial jobless claims fell 25k to 303k,
their lowest since April. 19k of the 303k were attributed to the hurricanes (still!). That implies a 284k underlying level, but we always warn that public holidays (Veterans Day last Friday) can distort the data. Continuing claims remain elevated, indicating that most of those who lost their jobs in the hurricanes are still out of work. Euroland industrial production fell 0.4% in Sept, with particular weakness in consumer goods. That’s the first fall in four months.
UK retail sales volumes rose 0.2% in Oct,
up for the third month running. With clothing sales down 0.3% due to warmer than usual weather, this is an OK result, and tends to suggest that, as with the housing data, consumer spending might be stabilising. More grounds for the Bank of England to remain on the policy sidelines, for now.
Date Country Release Last Forecast
18 Nov NZ RBNZ Financial Stability Report
Jpn BoJ Monthly Report
UK Oct M4 Money Supply %yr 11.2% 10.8%
Can Sep Wholesale Sales 0.7% 0.8%
21 Nov Aust Oct New Motor Vehicle Sales 2.0%
US Oct Leading Indicators -0.7% 0.5%
Latest Research papers/Publication
• NZ Q3 Retail Sales Review (15 November)
• NZ Weekly Forex Outlook (14 November)
• 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)
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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