Thursday January 26, 2006 - 20:10:36 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex: Westpac Institutional Bank Morning ReportNew Zealand Dollar NZD boosted after RBNZ leaves rates unchanged
The local session saw the NZD rally strongly after the RBNZ held interest rates at 7.25% as expected, but ruled out an easing in the near future due to strong domestic demand and inflation pressures. The currency jumped about 40 points to a session high of 0.6885 as traders covered short positions before easing back to spend the rest of the afternoon meandering between 0.6860-0.6880. In Europe the bid theme continued with the NZD posting a new high 0.6898 before falling sharply back to 0.6850 after rumours that Bollard’s speech today to the Canterbury Employers’ Chamber of Commerce was leaked to the market. The NZD opens this morning around 0.6840.
Australian Dollar: AUD sidelined by public holiday
The AUD was largely sidelined yesterday due to the Australia Day public holiday with moves shadowing that of the NZD. The currency traded in a tight 0.7527-0.7548 range during the domestic session and support continued offshore with the AUD reaching a high of 0.7559 before easing back as the USD rallied on the back of strong local data. The AUD opens this morning around 0.7520.
Major Currencies: Data gives USD general direction
US economic data out overnight failed to significantly benefit the USD, however it still managed a small gain during the course of overnight trading. The euro bounced around in a 1.2240-60 range for much of the night, but was then sold lower to its next support level around 1.2210. JPY continued it weakening trend, rising to 3-week highs above 116.00 where is stays this morning. Sterling fell through support at 1.7825, and briefly through 1.7800, but has recovered to open around 1.7810.
Events Today Latest Research Papers/Publications
US durable goods orders rise 1.3% in Dec
. Despite a few negatives in the detail, the overall message from the durable orders report was very strong. In contrast to Boeing data pointing to a further gain on top of November's 139% surge in aircraft orders, December saw a modest 8% decline. But vehicle orders jumped nearly 7%, reversing much of the prior two months' decline. So once again transport explained a significant part of the monthly rise in orders. Capital goods orders excluding defence and aircraft rose a very strong 3.5% in December, and November's previously reported 2% fall was revised up to a 0.2% gain. However the report also showed nil inventory growth in December.
US initial jobless claims point to strong jobs market.
The only modest 11k rise in initial jobless claims to 283k last week suggests that claims are settling in a new sub 300k range, indicative of strengthening labour market conditions, if the recent trend is sustained. Continuing claims jumped in the prior week, but the trend there is still downward too, another healthy sign. Note that we expect a 270k increase in January non-farm payrolls, and upward revision to December's 108k rise (data due Friday Feb 3).
The Bank of Canada published its Monetary Policy Report Update.
With the Canadian and world economies evolving in line with the Bank's expectations, it said that "the outlook for growth and inflation in Canada is similar to that in the October Report". Forecasts were tweaked a little, but risks remain balanced in 2006 and tilted to the downside in 2007 and beyond, as in October. The Bank reiterated the comment from Tuesday's press statement accompanying the rate rise that "some modest further increase in the policy interest rate would be required".
Country Release Last Forecast
US Q4 GDP ann’lsd 4.1% 3.0%
Dec New Home Sales–1 1.3% –4.0%
Jpn Jan Tokyo CPI %yr –0.6% flat
Dec Nationwide Core CPI %yr 0.1% 0.1%
Dec Retail Trade 0.6% 0.5%
Ger Jan GfK Consumer Confidence 3.8 n/f
UK Dec Mortgage Report from BBA
Can Q1 Business Conditions Survey 4 2.5
Latest Research papers/Publication
• NZ Terms of Trade:History & Significance (26 January)
• NZ RBNZ OCR Review (26 January)
• 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)
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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