Monday December 19, 2005 - 21:20:37 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex: Westpac Institutional Bank Morning ReportNew Zealand Dollar NZD struggles to hold ground above 0.6900
The domestic session saw the NZD stick to a narrow range edging above 0.6900 to reach an intraday high of 0.6914, unmoved by treasury’s forecast of a steeper economic slowdown. The NZD opened steady after eking out marginal gains in offshore trade on a broadly lower USD, which continued to remain heavy as investors pared back dollar positions. This theme was continued overnight with the NZD posting a fresh high of 0.6938 before selling off to open this morning around 0.6895.
Australian Dollar: AUD recovery short-lived
The AUD rose on Monday, partly assisted by stronger metal prices, staging a recovery off a six-week low versus the yen as speculative activity eased. One large buyer of AUD left the domestic market short resulting in a squeeze to an intra-day high of 0.7468. However, the AUD ran out of momentum after failing to break 0.7470 and it drifted lower during the offshore session before finding support around the 0.7400 mark where it opens this morning.
Major Currencies: USD bounces off 7-week low against the yen
In an offshore session void of any major economic data, the market’s focus shifted back to expectations of a prolonged period of near-zero interest rates in Japan. The change in market focus saw the USD bounce off seven week lows of 115.52 versus the yen to a 116.59 high. The euro also rebounded against the yen, up 0.6% on the day but was little changed against the USD. Overnight the euro traded a 55bp range with a high of 1.2030 and opens this morning just below 1.2000, while the USD/JPY opens this morning holding above 116.00.
US housing index weaker.
The December National Association of Home Builders index softened to 57 from 61 – continuing the slide from the 72 peak in June to what is now the lowest level in 32 months. The buyer traffic measure also declined to a 33-month low, a further signal that the housing market is starting to feel the bite of higher mortgage rates.
Eurozone industrial production weak.
The October monthly number came in at -0.8%, versus expectations for -0.4%. Germany registered a substantial rise of 1.1%, offset by plunging French and weak Italian production. Annual growth slowed to 0.1%.
Canadian wholesale sales bounce.
October wholesale sales jumped 2.2% (0.5% expected) as machinery and electronic equipment surged 6.2% and household goods rose 5.4%. The inventory-to-sales ratio also reversed a recent rise.
Country Release Last Forecast
NZ Nov External Migration 6,000 5,700
US Nov Producer Price Index 0.7% -0.8%
Nov PPI Core -0.3% 0.3%
Nov Housing Starts -5.6% 5.0%
Nov Housing Permits -5.2% 3.0%
Eur Oct Trade Balance EURbn s.a. 1.2 n/f
UK Nov RICS House Prices net bal % -9 n/f
Nov M4 Money Supply %yr 11.6% n/f
Nov PSNCR (Budget) £bn -5.0 n/f
Can Nov Consumer Price Index %yr 2.6% 2.0%
Nov CPI Core Ex 8 %yr 1.7% 1.5%
Latest Research papers/Publication
• NZ 2005/06 HYEFU/BPS Review (19 December)
• NZ Weekly Forex Outlook (19 December)
• NZ Q3 GDP Preview (16 December)
• NZ Nov REINZ Housing Review (16 December)
• NZ HYEFU/BPS Preview (16 December)
• NZ Q3 Current Account Preview (14 December)
• NZ Agribiz December 2005 (13 December)
• NZ Weekly Interest Rate Wrap-up (13 December)
• NZ Weekly Forex Outlook (12 December)
• NZ Q3 Terms of Trade Review (12 December)
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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