Thursday January 26, 2006 - 01:02:13 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex: Westpac Institutional Bank Morning ReportNew Zealand Dollar NZD stabilises, focus on rate review
The NZD traded in a tight range of 0.6815-0.6839 yesterday as the market paused ahead of the interest rate announcement today. In Europe the NZD rallied to a 1 week high of 0.6877 partly due to
short covering before easing back to 0.6830 as the USD strengthened. The currency opens this morning around 0.6850.
Australian Dollar: AUD steady, metals offset tame inflation
The AUD also traded in a tight range 0.7505 0.7522 with the market widely ignoring the slightly softer than expected CPI number. Strong industrial metal prices helped it hold above 0.7500. Overnight the AUD followed the NZD higher to post a high of 0.7558 before retreating. It opens this morning around 0.7537.
Major Currencies: JPY weakens as Europe flat
The USD strengthened against the JPY but was broadly steady against European currencies in what could be described as technically driven overnight trading. Around midday in the London session USD/JPY bounced off a low of 114.64 and was bought steadily from then on, reaching a high of 115.99 before retracing slightly. The euro traded to 4 month highs at 1.2320 but could not hold on to its gains as USD sellers emerged, and it opens this morning around 1.2265.
US existing home sales fall 5.7% in Dec.
Existing home sales fell for the third month running. Last year was a record year for new home sales, but from their peak in June at a 7.35mn annualised pace, sales fell 10.2% over the following six months, to their lowest since March 2004. This adds to the swathe of US housing indicators that have turned south in the closing quarter of 2005. Housing prices are softening too. Annual median house price inflation peaked at over 15% yr earlier in 2005, but had fallen to 10.5% yr by Dec.
The Chicago Fed's national activity index
(a function of 85 data series on production, jobs, surveys, and so on) also captured a late year slowdown after the volatility surrounding Katrina in Q3. Note too that revised seasonal factors moderated the extent of the ISM manufacturing index's late 2005 slowdown a little, but saw the non-manufacturing index revised up a little in December.
UK GDP growth accelerated to 0.6% in Q4,
the equal strongest quarterly growth rate since mid 2004. The limited breakdown available showed that services expanded at a 0.9% pace, but the production sector fell 0.6%, its fourth consecutive quarter with nil or negative growth. Still, this late 2005 growth momentum argues against a near-term rate cut from the Bank of England. Also, the minutes to the January BoE monetary policy committee meeting showed a 8:1 vote in favour of on hold policy, with Steven Nickell continuing to dissent in favour of a rate cut.
German Ifo business survey surged 2.3 pts to 102.2 in Jan,
with expectations about the growth outlook driving the latest gain, although current conditions also improved. The Ifo stated that doubts regarding the sustainability of the current upswing "should be further dispelled by these results. The upswing has gained both in breadth and momentum".
German inflation was unchanged at 2.1% yr in Jan,
softer than expected, although last month, import prices continued to accelerate.
Country Release Last Forecast
Aust Australia Day Holiday
US Dec Durable Goods Orders 4.4% 2.0%
Initial Jobless Claims w/e 21/1 271k 285k
Dec Help Wanted Index 39 40
Jpn Dec Trade Balance ₯bn 708760
Dec Corp. Services Prices %yr 0.4% 0.2%
Can BoC Monetary Policy Report Update
Latest Research papers/Publication
NZ Weekly Forex Outlook (23 January)
NZ Q4 CPI Review/OCR Preview (18 January)
NZ Q4 QSBO Review (17 January)
NZ Weekly Forex Outlook (16 January)
NZ Weekly Interest Rate Wrap-up (16 January)
NZ Q4 CPI Preview (13 January)
NZ Q4 Employment Confidence Index (11 January)
These papers/publications are available on Online Research on
Westpac Institutional Banks 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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