Wednesday November 23, 2005 - 20:30:53 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex: Westpac Institutional Bank Morning ReportNew Zealand Dollar: Stronger NZD ignores business confidence
The NZD opened yesterday’s local session nervously following the release of the NBNZ business confidence reading for November. Although general business sentiment fell to net -66.2% (the lowest reading since the aftermath of the ‘87 crash), it was the release of the FOMC minutes from November 1st that set market tone for the day. Notes from the minutes to suggest the pace of US interest rate rises may abate, becoming more reliant on future data releases saw the USD sold heavily. The NZD quickly rallied through 0.6900 establishing an intraday high of 0.6929. Overnight, the currency extended gains to 0.6942, despite stronger-than-expected US consumer sentiment and opens this morning towards these overnight highs.
Australian Dollar: AUD gains following FOMC minutes
The AUD also notched up a solid performance as the USD was marked lower across the board following the FOMC minutes release. A mild improvement in job vacancies with little wage nmpressure added little during a USD dominated session during which AUD/USD gained from 0.7357 to 0.7387. Overnight followthrough was negligible however, with better Michigan sentiment limiting further USD losses ahead of the Thanksgiving holiday. The AUD retreated from an overnight high of 0.7392 and opens this morning at 0.7375.
Major Currencies: USD gains in light trading
The USD rose against major currencies on Wednesday on the back of participants lightening up positions ahead of the long Thanksgiving weekend. After an initial gain in the euro, it was sold over the next few hours in technically driven trading. After hitting a low of 1.1764, the euro bounced around in choppy trading into the New York close. The story was much the same in the Sterling, bouncing in a 1.7200-50 range for most of the day. JPY also lost ground against the USD, but it did not retreat as far as the 119.00 level which has been seen lately.
US Michigan sentiment index stronger.
The monthly number was revised up from 79.9 to 81.6 (mkt f/c 81.0). The improvement in the index relative to the preliminary report was all in the expectations component; the current conditions index declined slightly. Both components improved by several points relative to the October report.
US jobless claims data weaker.
Initial claims jumped 30k to 335k in the week ending Nov 19, though the jump seems related to the Veterans’ Day holiday the week before. Claims unable to be filed in that week due to the holiday spilled into the latest week. The underlying claims remained low over the 2 weeks, averaging 320k (in line with where claims settled after the hurricane related spike). Moreover, the hurricane related job losses still added 21k in the week.
UK Bank of England minutes show 9-0 vote.
In fact, the minutes showed that the MPC didn't even discuss the possibility of a rate cut at the November meeting. Divergent opinions still exist with the minutes saying "There was a range of views among individual members concerning the likely pace of demand growth over the forecast period. Some members believed that the balance of risks to GDP growth was weighted slightly more on the downside in the second half of the forecast period".
Eurozone industrial new orders strong.
The monthly number was a solid +1.1% (mkt f/c 0.9%), bolstered by solid results from Germany (+3.3%).
Date Country Release Last Forecast
24 Nov NZ Q3 Producers Price Index Output1.2% 1.2%
US Thanksgiving Holiday
Jpn BoJ Monetary Policy Meeting Minutes
Oct Adj Merch Trade Bal JPYbn 556 565
Eur Sep Current Account EURbn -6.6 n/f
UK Q3 Business Investment 1.5% n/f
25 Nov NZ Oct Merch Trade Bal NZDmn -991 -1,042
Jpn Nov Tokyo CPI %yr -1.0% -0.8%
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)
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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