Monday March 20, 2006 - 21:02:37 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex: Westpac Institutional Bank Morning ReportNew Zealand Dollar NZD hits fresh 20-month lows
The NZD was sold aggressively again yesterday, with another 18 month low seen at 0.6284 during the Asian session, and a fresh 20 month low at 0.6234 overnight. The market is expecting further weak economic data at the end of this week with the release of Q4 Current Account and Q4 GDP. The NZD opens this morning just off last nightâ€™s lows at 0.6240.
Australian Dollar: AUD sell-off continues
The AUD was sold heavily yesterday as traders aimed for stops at the 0.7240-45 level. This level held for most of the day but was smashed as the London market opened, with talk of AUD/JPY and AUD/EUR selling and options barriers being targeted at 0.7210 and 0.7205. The AUD traded down to a low of 0.7178 overnight and opens this morning just above 0.7200.
Major Currencies: USD recovers ahead of Fed Chair speech
The USD was largely in positive territory on Monday as the market awaited a speech from Fed Chairman Ben Bernanke for clues to future interest rate direction. The euro gave up around 20 points on the day in a whippy 50 point range, with traders having arguments to push the euro both ways. The dollar was up 0.3% against the JPY, recovering well from a new two-week low which has been described necessary pullback after the market got ahead of itself. It opens this morning around 116.20.
US leading index pared back.
The Leading index declined 0.2% in February, as foreshadowed by some of the indicators that make up the index. But Januaryâ€™s originally-reported 1.1% jump was pared back 0.6ppts, making the start to 2006 less spectacular. Fedspeak: Fed Governor Cathy Minehan spoke today to a real estate association. Unsurprisingly, housing featured in her address. She said the Fed see â€śconstruction diminishing somewhat and real estate prices flattening, but not declining.â€ť However, she implied the main risk to that outlook was to the downside for economic growth via added drag from construction and reduced wealth. Though aimed at a specific audience, the comments do suggest that the impact of a looming housing slowdown is creeping into Fed considerations. Governor Minehan is not a FOMC voter this year.
Fed Chairman speaking later.
Ben Bernanke, the new Fed Chairman, is due to speak late tonight (at 0000GMT, 1900NY time), the topic of his address being â€śreflections on the yield curve and monetary policyâ€ť. Next weekâ€™s FOMC meeting is his first at the helm, and market participants will be keeping an ear out just in case he drops any hints on the likely pace of Fed action under his chairmanship.
German PPI picks up.
Annual growth in German producer prices accelerated to 5.9% in February. However, the pick-up is entirely due to energy costs: without those costs the PPI increased only 1.1% y/y, remaining mild.
UK house prices rise further.
Rightmove house price growth for March added to the picture of gathering momentum in the UK housing market. Prices increased 0.9% in the month, nudging annual growth up to 4.3%.
UK Feb money supply and lending growth remained firm.
Annual M4 lending growth (ex-securitisation effects) picked up to 12.5%. M4 money supply growth held around the 12% y/y mark it elevated to in recent months.
UK Public Sector Net Credit Requirement
(budget deficit) in February was ÂŁ1.7bn, and ÂŁ24.4bn for the first 11 months of the current financial year.
Country Release Last Forecast
NZ Feb External Migration s.a. 550 600
Aust Q4 Dwelling Commencements â€“3.4% â€“5.0%
US Feb Producer Price Index 0.3% â€“0.1%
Feb PPI Ex-food, energy 0.4% 0.1%
UK Feb CPI %yr 1.9% 2.0%
Can Jan Retail Sales 0.3% 1.0%
Feb Leading Indicators 0.5% 0.5%
Latest Research papers/Publication
â€˘ NZ Weekly Forex Outlook (20 March)
â€˘ NZ Q4 Current Account Preview (17 March)
â€˘ NZ Q4 GDP Preview (16 March)
â€˘ NZ Weekly Forex Outlook (13 March)
â€˘ NZ RBNZ March MPS Review (9 March)
â€˘ NZ Q4 Terms of Trade Review (9 March)
â€˘ A dysfunctional tool? (7 March)
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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