Thursday December 8, 2005 - 20:26:47 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex: Westpac Institutional Bank Morning ReportNew Zealand Dollar NZD sold again
The NZD opened on its highs yesterday and, for the second day in a row, it looked weak from the beginning. With NZD already under pressure before the RBNZ announcement, it was quickly down to 0.7005 after the 25bps hike and statement, but the currency did manage a bounce up to 0.7035 soon after. From there it continued to decline to a daily low of 0.6972 and closed the local session slightly above this. The offshore sessions proved directionless and the NZD opens this morning around 0.7000.
Australian Dollar: AUD gains after mixed day
It was a mixed day for the AUD in volatile trading conditions. Better than expected unemployment data pushed the AUD higher to 0.7497 before it was sold hard straight to its daily low of 0.7444. The volatility only increased overnight as AUD was bought back to 0.7490, then bought again early this morning as the USD eased against its major partners. The AUD opens this morning around 0.7510.
Major Currencies: USD slumps as ECB, BoJ remarks sting
The euro rallied strongly against the USD after hawkish comments by the ECB and a greater than expected rise in German industrial output for Oct. The euro’s rally triggered stop-loss orders around 1.1800 to reach a session high of 1.1850 against the dollar. Not to be outdone by their European counterparts the BoJ Governor issued a statement saying that an end to the bank’s deflation-fighting policy “is close”. This saw the USD fall steeply against the yen to reach a session low of 120.05.
Events Today Latest Research Papers/Publications
US initial claims rise 6k to 327k,
a small enough rise to be considered simply noise. It was perhaps boosted a little by claims from people who lost their jobs in November but were unable to
file in Thanksgiving week because offices were shut. A Thanksgiving distortion may also be behind the 137k plunge in continuing claims in the prior week, which pulled the level of ongoing claims down to 2603k, about where they were prior to hurricane Katrina. If there is not a sharp bounce next week, the implication would be that everyone who lost their job due to Katrina suddenly found a job in late Nov. That seems unlikely.
Canadian housing update.
Housing starts recovered 7.4% in November, reversing most of October's 9.9% fall, and continuing the sharp swings that this series has seen for four months now. Volatility in the multi-family housing sector has been the main factor at play; the underlying trend in activity is modestly downward. Meanwhile, new house prices posted an above trend 0.7% rise in October, for a 5.4% yr annual rate.
German industrial production rises 1.1% in Oct.
Another solid gain in factory output, with more to come given the recent strength in orders. All major output categories posted rises: consumer, capital and intermediate goods; durables and nondurables; energy and construction. Germany is clearly benefiting from robust global growth, which is underpinning an export-led industrial recovery.
The Bank of England left its repo rate unchanged at 4.5%
following the monetary policy committee's final meeting for 2005. We expect the next move by the BoE will be a further cut, most likely in Q2 next year.
Country Release Last Forecast
NZ Q3 Building Work 4.7% -1.8%
US Dec UoM Consumer Sentiment (Prelim) 81.6 85.0
Oct Wholesale Inventories 0.6% 0.5%
Jpn Q3 GDP (F) %qtr 0.4% 0.4%
Can Q3 Capacity Use % 86.7% 87.2%
Q3 Labour Productivity flat 0.5%
G7Oct Leading Index 102.5 n/f
Latest Research papers/Publication
• RBNZ Dec MPS Review (8 December)
• 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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