Tuesday December 6, 2005 - 19:44:38 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex: Westpac Institutional Bank Morning ReportNew Zealand Dollar NZD consolidates gains
The NZD started yesterday at the top of its range and gradually decreased in value over the course of the day. In early trading the NZD went as high as 0.7200 but again failed to push through as selling took hold. From there the currency was quickly pushed back to 0.7175 and traded around this level for the rest of the local session. A quiet overnight session saw NZD trade a 0.7161 low and fail to inspire a topside rally. It opens this morning around 0.7175.
Australian Dollar: AUD buying continues
The AUD followed a similar trend to NZD for much of the local session. Having opened the day around 0.7525 the AUD could not hold onto its gains and touched a 0.7502 low in early afternoon trading. From there buyers emerged in AUD as it cracked through the previous high in the London session. The currency is supported at 0.7500 and opens this morning around 0.7540 as participants eye Australian data due today.
Major Currencies: Consolidation mode
The USD showed little reaction to revised data on US productivity that came in close to expectations, or to a report showing strong US factory orders for Oct. Against the yen and euro it traded in relatively tight ranges and ended the session slightly lower with the market focused on key technical levels as traders pared back extreme positions accumulated in recent sessions. The euro’s rise was assisted by news that German Oct manufacturing orders rose by a far bigger than expected 2.0%.
US factory orders up 2.2% in Oct.
The already strong durables gain was revised up from 3.4% to 3.7%, mostly due to the non-transport component; non-durables rose 0.5% but this was constrained by a decline in the petroleum component. Overall then, a robust report, as indeed was the news that factory stocks rose 0.6% – a solid start to Q4 for the contribution from inventory building to GDP growth.
US pending home sales fall 3.2% in Oct.
This further fall in sales adds weight to the view that US housing is softening, notwithstanding the surge in new home sales reported for October.
US productivity revised higher in Q3 to 4.7%,
reflecting previously published revisions to GDP growth. Consequently unit labour costs were revised lower.
US weekly retail data:
chain store sales plunged 3.1% in the week ended Dec 3, implying a very sluggish start to the holiday shopping season. Perhaps the seasonal factors are not adequately reflecting the tendency in recent years of Christmas shopping to take place at the last minute. Similarly, Redbook was down 0.3%, compared to +0.3% in the last November report.
The Bank of Canada lifted its overnight rate 25bps to 3.25%
and said in the statement that more "will be required", even though "risks to the outlook are balanced over the short term, but are tilted to the downside through 2007 and beyond." Data: the IVEY PMI rose from 64.8 to 65.8 in Nov, a bullish manufacturing sector signal. Building permits rose 1.2% in Oct.
German industrial orders rose 2.0% in Oct,
their fifth solid gain in six months, with both domestic and foreign orders contributing.
UK industrial production fell 1.0% in Oct.
Extremely disappointing factory data out of the UK. Manufacturing is now down three months running, and in October, five of the seven major components recorded declines (only food and chemicals posted gains). Total IP was even weaker due to mild weather constraining gas and electricity usage.
Date Country Release Last Forecast
7 Dec Aust RBA Rate Announcement 5.50% 5.50%
Q3 GDP 1.3% 0.5%
Nov Cashcard Retail Index -0.8% n/f
US Oct Consumer Credit USDbn -0.1 2.0
UK Nov BRC Shop Price Index
8 Dec NZ RBNZ MPS 7.00% 7.25%
Aust Nov Employment chg –19.8k 40k
Latest Research papers/Publication
• NZ Weekly Interest Rate Wrap-up (6 December)
• RBNZ Dec MPS Preview (5 December)
• NZ Weekly Forex Outlook (5 December)
• NZ Weekly Forex Outlook (28 November)
• NZ Weekly Forex Outlook (21 November)
• NZ Q3 Retail Sales Review (15 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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