Thursday February 2, 2006 - 21:18:04 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex: Westpac Institutional Bank Morning ReportNew Zealand Dollar NZD subdued ahead of key data
The NZDās rally petered out yesterday as traders eyed a potential boost for the USD from key job data due out today. The NZD, which had firmed on Wednesday as uridashi concerns appeared to have waned, saw trading shrink to a narrow 20 basis point range during the domestic session. The currency pushed higher overnight to reach .6908, however the NZD is expected to return further subdued trading today ahead of the data. We open around .6890 this morning.
Australian Dollar: AUD also in holding pattern
Softer housing data saw the AUD trading heavily to a low of .7513 yesterday, however with commodities remaining strong, there seems little impetus to push the AUD down much further. The Australian market also remains focused on US market activity, including the key US payrolls number, which has the potential to influence and set the trend for sentiment and momentum over coming weeks. Overnight trading saw the currency move up to a high of .7555 and we open slightly lower around the .7540 mark this morning.
Major Currencies: Dollar slips versus euro on Al Qaeda talk.
The USD slipped against the Euro in Thursdayās offshore session after US intelligence chief John Negroponte said al Qaeda is still plotting and preparing for attacks on the US. Negroponteās comments addressed to the senate intelligence committee, rattled the markets prompting a USD sell-off against most major currencies. The Euro dropped as low as 1.2032 following the widely expected āno changeā in interest rates then popped up through 1.2100 to a 1.2108 high on the al Qaeda news. The Euro opens this morning around 1.2100.
US productivity falls 0.6% in Q4.
The business output measure used to calculate productivity shows a steeper slowdown in Q4 activity growth than the GDP figures did. That slower growth was despite sharp growth in hours worked, hence the productivity slump. Hourly compensation growth slowed, but productivity fell much more, hence the 3.5% jump in unit labour costs. This blip in ULC is not unduly worrying as all indications are that GDP growth will bounce back in Q1, making for a more favourable productivity calculation in three monthsā time. Indeed annual growth in ULC slowed right through 2005, from 3.4% yr at the start of the year, to 1.0% at the end of the year.
US initial claims fall 11k to 273k.
The claims data were strong, yet again. Initial claims reversed most of last weekās rise, and continuing claims fell sharply. Both numbers relate to weeks after the non-farm payrolls survey, but nevertheless add to the sense that the labour market was in good shape last month.
US monthly chain store sales rose 5.5% yr in Jan,
their strongest in more than eighteen months, and totally in contrast with the lacklustre weekly figures through the month. With January auto sales reported strong, and payrolls likely to boom, January is shaping up as a very impressive month for economic activity.
The ECB left the repo rate unchanged at 2.25%.
But the way was paved for a March rate rise at ECB chief Trichetās press conference. He explicitly did not use the term āappropriateā to describe the current level of rates; when a journalist observed that Trichet had used the term āvigilanceā three times in the statement, Trichet said he was āhappyā; he later used the phrase āincreased vigilanceā; price risks were āprogressively augmentingā (ie going up); market pricing of a further rate rises was āreasonableā. And so on.
Country Release Last Forecast
NZ Dec External Migration (Annual) 6.2k 6k
Aus Dec Trade Balance AUDbn ā2.5 ā2.0
Dec Retail Trade ā0.1% 0.5%
Q4 Real Retail Trade %qtr 0.5% flat
US Jan Non-Farm Payrolls 108k 270k
Jan Unemployment Rate % 4.9 4.8
Jan UoM Consumer Sent (F) 93.4 92.0
Dec Factory Orders 2.5% 1.1%
Jan ISM Non-Manufacturing 61.0 61.0
Eur Jan PMI Services 56.8 57.4
Dec Retail Sales ā0.1 ā0.3%
Latest Research papers/Publication
ā¢ NZ Economic Overview January 2006 (1 February)
ā¢ NZ Labour Market Preview (1 February)
ā¢ NZ Terms of Trade:History & Significance (26 January)
ā¢ NZ RBNZ OCR Review (26 January)
ā¢ NZ Weekly Forex Outlook (23 January)
ā¢ NZ Q4 CPI Review/OCR Preview (18 January)
ā¢ NZ Q4 QSBO Review (17 January)
ā¢ NZ Weekly Forex Outlook (16 January)
These papers/publications are available on Online Research on
Westpac Institutional Bankās 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. Ā© 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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