Wednesday February 8, 2006 - 20:17:06 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex: Westpac Institutional Bank Morning ReportNew Zealand Dollar NZD dips as wage growth threat subsides
The Kiwi opened on a softer note yesterday ahead of the weekâ€™s key wage & unemployment data. The release of the RBNZâ€™s preferred Labour Cost Index for private sector wages saw a robust increase of 0.8% in Q4. Although wage growth remains firm, this was viewed as less threatening than Q3 and an unlikely catalyst for higher interest rates, prompting NZD selling. The currency softened from a local session high of 0.6818 to a low of 0.6773, with continued Japanese demand preventing deeper losses. While follow through selling during the offshore session, saw losses to 0.6745, the currency has improved from these overnight lows to open this morning at 0.6785.
Australian Dollar: AUD on the back foot as gold price slides
Following the sharp overnight decline in precious and base metals, the AUD opened yesterdayâ€™s domestic session on the back foot. The gold price fell 3.4%, overnight, precipitating an early break lower in the AUD through 0.7400 to 0.7380. With the RBA leaving rates unchanged, as expected and despite a modest improvement in consumer sentiment for February, the currency remained pressured, extending losses overnight to 0.7368, before recovering 0.7400 from where the market opens this morning.
Major Currencies: Positioning ahead of BOJ meeting sees Yen squeezed higher
Despite Alan Greenspan passing on the mantle of Federal Reserve Chairman, market participants still hang on his every word and last nights rhetoric is testament to that. In a day very thin on economic data, Greenspan remarked that the US economy was stronger than most thought and the markets may have underestimated the amount of interest rate hikes the Fed were going to deliver. The US dollar rallied as a result and took the euro, Sterling and Swiss franc to five-week lows. The euro traded down to 1.1923 before a minor recovery to open today at 1.1945. Sterlingâ€™s intraday low was at 1.7378 but opens today a touch above 1.7400. Tuesdayâ€™s yen strength was reversed. The US dollar recovered yesterday, rallying from support at 117.60 to trade at 118.65 against the Japanese currency this morning.
No US data to report.
Canadian housing starts jumped 6.6% in Jan,
continuing the recent run of upside surprises in the sector.
UK industrial production rises 0.2% in Dec.
This follows a 0.8% Nov gain, so some evidence of a late 2005 stabilisation in the sector, although annual growth remains weak at â€“2.2% yr.
Country Release Last Forecast
Aus Jan employment chg 2.1K 10K
Jan unemployment rate 5.1% 5.2%
NZ Q4 HLFS employment 1.3% 0.2%
Q4 HLFS unemployment rate 3.4% 3.6%
Jpn Jan consumer confidence 46.7 47.0
Kor Jan consumer confidence 100.4 101
Bank of Korea meeting â€“ â€“
UK Dec trade balanceÂ£bn -6.0 -5.5
BoE repo rate decision 4.50% 4.50%
US Initial jobless claims w/e 273K 280K
Dec wholesale inventories 0.4% 0.6%
Dec new house prices 0.5% â€“
Fedspeak â€“ â€“
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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