Monday January 30, 2006 - 23:07:03 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex: Westpac Institutional Bank Morning ReportNew Zealand Dollar NZD enjoys long weekend
The NZD enjoyed a quiet start to the week brought on by a currency
holiday, having been battered around late last week. In very thin
trading conditions NZD traded a 0.6800 â€“ 0.6835 range with little
conviction shown at either the high or low of the day.
Australian Dollar: AUD Largely Unchanged
The AUD also enjoyed a quiet start to the week with the market having no new data to digest. On opening around 0.7490, AUD traded to its highs over the next few hours, reaching 0.7515 around early afternoon. From there it seesawed into offshore trading sessions, gradually losing favour and reaching its 0.7483 low early this morning. It remains on its lows as we open up today, with the market already looking towards
Major Currencies: USD strengthens ahead of FOMC decision
A very quiet session yesterday, with little risk appetite, ahead of the Federal Reserves interest rate decision. US personal income and spending data showed both had grown more than expected but neither managed to change expectations of a rate hike. The USD extended a week-long rally against the yen to reach 117.45 overnight though it gave back some of its gains as investors await the Fed. The yen was also pressured by Japanese data showing industrial production fell short of market expectations in December. USD/JPY opens around 117.65 this morning. The euro was also down against the USD, to a low of 1.2086 overnight, we open this morning around this level. Sterling followed suit to hit a low of 1.7665 last night, and opens on the low today.
Japanese Dec industrial production rose 1.4%mth, 2.7%qtr.
That follows a 1.5% monthly gain in Nov, which in turn came on the back of three consecutive rises. A strong second half indeed. Taken together with the Japanese data out late last week, it seems increasingly likely that we will see a robust Q4 GDP number on February 17.
US core PCE deflator 0.1% in Dec.
The core PCE deflator printed a subdued 0.1% in December, but both October and November were revised up from 0.1% to 0.2%, consistent with the 2.2% annualized pace of the deflator in all of Q4. Even so, the annual pace of growth in the core PCE deflator was steady at 1.9% yr in December, still just below the 2% upper limit of the Fedâ€™s â€śimplicitâ€ť inflation target. That compares to 2.3% yr in December 2004, so inflation concerns should not intensify too much at this stage.
US personal income grew by 0.4% in Dec,
a touch stronger than we expected, based on the hours worked and earnings data from the payrolls report. Personal spending grew by a solid 0.9%, buoyed by the late year upswing in auto sales. Both data series saw upward revision to recent history, although that was expected given that the quarterly totals were published in the Q4 GDP report last week.
Canadian industrial product prices fell 0.3% in Dec,
their second consecutive decline. The detail showed an unexpected further fall in energy prices of 4.1%, on top of broad-based price weakness across most other categories, with CAD strength a factor at play.
Country Release Last Forecast
NZ Dec Dwelling Consents 2.8% 2.0%
Aust Dec Credit 1.1% 1.1%
Dec NAB Business Survey 11 n/f
US Q4 Employment Cost Index 0.8% 0.8%
Jan Conf Brd Consumer Confidence 103.6 102.0
Jan Chicago PMI 60.8 61.5
FOMC Interest Rate Decision 4.25% 4.5%
Eur Jan Business Climate Index 0.35 0.45
Jan Economic/Consumer Confid 100.5/â€“11 100.8/â€“11
Jan CPI Flash %yr 2.2% 2.4%
UK Dec Mortgage Lending ÂŁbn 8.7 9.0
Dec Net Consumer Credit 0.91.3
Jan GfK Consumer Confidence â€“9â€“8
Can Nov GDP 0.2% 0.2%
Latest Research papers/Publication
â€˘ NZ Terms of Trade:History & Significance (26 January)
â€˘ NZ RBNZ OCR Review (26 January)
â€˘ NZ Weekly Forex Outlook (23 January)
â€˘ NZ Q4 CPI Review/OCR Preview (18 January)
â€˘ NZ Q4 QSBO Review (17 January)
â€˘ NZ Weekly Forex Outlook (16 January)
â€˘ NZ Weekly Interest Rate Wrap-up (16 January)
â€˘ NZ Q4 CPI Preview (13 January)
â€˘ NZ Q4 Employment Confidence Index (11 January)
â€˘ NZ Weekly Forex Outlook (9 January)
â€˘ NZ Weekly Interest Rate Wrap-up (9 January)
These papers/publications are available on Online Research on
Westpac Institutional Bankâ€™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. Â© 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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