Monday February 6, 2006 - 20:53:45 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex: Westpac Institutional Bank Morning ReportNew Zealand Dollar Broad US dollar strength hurts NZD
The NZD had a remarkable turn around during its Waitangi Day public holiday, giving back all its gains from last week. After strengthening every day last week, the NZD tumbled on Monday as the USD strengthened against all major currencies. The US Federal Reserve is expected to persist in keeping inflation pressures under control by raising interest rates and hence increasing investor appeal to the USD. The NZD was all one-way traffic yesterday, opening on the high at 0.6918 and steadily selling off down to the low at 0.6810. We open this morning at 0.6810, testing the low early
Australian Dollar: AUD suffers same fate as the majors
The AUD fell victim to a rampaging USD on Super Bowl Monday. The rebounding USD, buoyed by strong job data and increased chances of more rate hikes, sent the AUD to a one-month low in alarming fashion. Aust economic data for Jan was largely ignored despite a sharp jump in the monthly inflation gauge and a fall in job ads. The AUD opened at 0.7535 and headed lower with little buyer support to halt the sell-off. The low traded at 0.7415, a level not traded since Jan 4, we open today at 0.7420.
Major Currencies: Dollar hits 1-month high vs European currencies
The dollar hit a one-month high against the euro, sterling and the swiss franc on Monday, boosted by expectations for higher US interest rates and technical factors adding to gains it made Friday after robust January US payrolls data. In overnight trade the euro was pushed down to 1.1951 after breaking through key technical support of 1.1965. The yen fared a little better against the dollar supported by the latest Japanese portfolio flows data, the Nikkei hitting a new five and half year high, and the euro/yen cross breaking below technical support at 142.50 yen. The dollar posted a high of 119.40 against the yen before the yen staged a recovery to open this morning around 119.00 whilst the euro opens around its low at 1.1957.
No US data to report.
Canadian Ivey PMI rises from 48.3 to 54.1 in Jan.
The (not seasonally adjusted) Ivey PMI recovered enough of its surprisingly steep December plunge in January to leave it 4.1 pts above where it was a year ago. That is a reasonable signal of moderate but not quite robust growth in the Canadian manufacturing sector.
Canadian building permits jump 27.4% in Dec.
The permits surge in December beat all expectations. While there was undoubted strength in the report, it was boosted by a 41% surge in residential approvals, explained largely by developers in Toronto scrambling to beat increased council charges for large developments, introduced in January. The ex-Toronto number was up nearly 12%.
Some weaker European data
The Euroland retail PMI fell back to below the neutral 50 level to 49.7 in Jan, reflecting a very soft French report and a mild pull-back in German retail activity. With Euroland retail sales sluggish through Q4 anyway, this suggests an even weaker start to Q1 retail spending. We caution, however, that the retail PMI has only been around for two years, so its credentials as a reliable indicator are not well established. Also, German factory orders fell 1.6% in December, but that needs to be viewed in the context of the string of three monthly gains from September to November. The orders trend is still upwards. In December, the decline was apparent across both the domestic and foreign sectors.
Date Country Release Last Forecast
Aus Jan Cashcard retail index 0.06 n/f
Q4 NAB business survey --
Inr BI monetary policy decision --
Ger Dec industrial production -0.3% 1.0%
UK Jan BRC retail sales monitor --
US Dec consumer credit $bn -0.6 5.5
Latest Research papers/Publication
â€¢ NZ Economic Overview January 2006 (1 February)
â€¢ NZ Labour Market Preview (1 February)
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)
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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