Tuesday November 22, 2005 - 00:14:04 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex: Westpac Institutional Bank Morning ReportNew Zealand Dollar: NZD drifts in uneventful day
In a day void of any major economic data the NZD range traded on Monday. The NZD tested 0.6900 resistance in the domestic session, eventually posting a 0.6895 high and trading a 31bps intraday range. Overnight, the NZD was taken higher to 0.6919 but failed to hold onto its gains tracking a weaker euro following comments from ECB president Jean-Claude Trichet that the Central Bank was not necessarily planning a series of rate hikes. The NZD opens this morning at around 0.6880.
Australian Dollar: AUD tests 0.7400 resistance
Like the NZD, the AUD traded a tight range during Monday’s domestic session. In data released, new motor vehicle sales were down 6.7% in Oct, the largest monthly fall since Jan 2001. The AUD traded a 0.7324-0.7345 range in Asian trading and was taken higher testing 0.7400 offshore before Trichet’s interest rate comments took the AUD lower.
Major Currencies: EUR slammed on mixed message
Major currencies lost ground against the USD overnight on the back of a confusing interest rate message sent by the ECB. After first saying that there was an interest rate rise in the pipeline, ECB president Trichet then stated that this was not necessarily the first of a series of hikes. The euro was trading around its session highs at 1.1830 before the comments but was quickly sold to 1.1760, and eventually found support around 1.1720. Sterling held near its two-year low overnight as it bounced around, taking somewhat of a backseat to the euro, and it opens this morning largely unchanged.
Despite comments by President Bush regarding currency flexibility, the yuan and JPY enjoyed quiet trading sessions overnight, and the JPY opens around 119.00 this morning.
US leading index good.
While not a particularly market sensitive number, the rise in the October index (by 0.9%) was the strongest index move since June. The impact of the hurricanes on activity had dragged the index down 0.8% in September. Seven of ten index components registered improvement in October, with about half the gain coming via labour market conditions improving – initial jobless claims have now dropped back to pre-hurricane levels.
ECB’s Trichet once again sells a dummy.
While markets took last Friday’s comments from the ECB President as very positive for EUR, today’s comments once again undid the good work. Specifically, on further rate increases Trichet said “I do not see at all ex ante the start of a series of augmentation of interest rates...There is no process of catching up in our own process of handling monetary policy. It would not be a good working assumption to consider that we are at the start of a series of interest rate increases ... I say we will do what would be necessary to do.
Canadian Sep retail sales strong.
The headline came in at a
weak -0.9%, dragged lower by weak auto sales, but the ex autos
number was a solid 1.7%, well above market expectations for 1.9%.
UK ODPM house prices improve. The annual number rose to
3.3% from 2.8%.
Date Country Release Last Forecast
22 Nov NZ Oct External Migration Annual 6,618 n/f
US Nov Richmond Fed Index 12 12
Nov 1 FOMC Meeting Minutes
Jpn Sep Tertiary Industry Index 1.7% -0.4%
Ger Q3 GDP Revision 0.6%a n/f
Fra Oct Consumer Spending -0.6% n/f
UK Nov Industrial Trends Survey
Can Oct CPI/Core Ex-8 %yr 3.4%/1.7% 3.0%/1.7%
23 Nov NZ NBNZ Bus Outlook net % -54.9% n/f
Aust Nov Skilled Vacancies Trend -0.2% n/f
US Nov UoM Consumer Sent (F) 79.9a 81.0
Latest Research papers/Publication
• NZ Weekly Forex Outlook (21 November)
• 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)
• 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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