Tuesday March 28, 2006 - 01:36:55 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex: Westpac Institutional Bank Morning ReportNew Zealand Dollar More poor NZ data adds to negative sentiment
NZâ€™s February trade deficit was affected by softer than expected exports, with notably weak meat exports after Q4â€™s surge in pastoral exports. Imports were inflated by aircraft purchases but most other imports look weak. The headline number for Feb was near expectations at $257mn but the negative sentiment that has engulfed the NZD over recent weeks meant the currency was taken to a new 22-month low at 0.6048. The NZD opens this morning around 0.6060 and the market awaits a raft of US data tonight and NZ consumer confidence tomorrow.
Australian Dollar: AUD continues to sag
The AUD continued to be dragged down with the NZD yesterday, sinking to a new 18-month low as global investors lump both currencies in the same basket. Plateauing commodity prices, while still at multi-decade highs, have not given the AUD any respite since it was sold heavily from 0.74 cents. The currency opens this morning just above 0.7050 having recovered slightly from an overnight low of 0.7036.
Major Currencies: JPY gains as most eye Fed
JPY was the biggest mover amongst the major currencies yesterday in an otherwise quiet start to the week. Most Japanese business financial year-ends are the end of March, with the strengthening JPY attributed to investors repatriating funds to shore up the books. JPY strengthened from around 117.50 to 116.70 during the local session yesterday and held onto these gains overnight. Elsewhere major currencies were largely unchanged as traders were unwilling to take large positions ahead of tonightâ€™s US Fed meeting.
Tankan lead indicator softened but remains expansionary.
The MoF/Cabinet Office business outlook survey, which covers 11,300 corporations, fell to a net positive 6.1% (large firms, all industries) in Q1, from 10.5% in Q4 last year. Large manufacturers fell to 3.1%, and large nonmanufacturers fell to 7.9%. It is important to note that the survey questionnaire is worded in a materially different fashion to Tankan. While Tankan asks for an absolute judgement on business conditions for its headline response, this survey asks respondents to compares conditions with the previous quarter. So there is no guarantee that the two series will be aligned in any particular quarter â€“ particularly when activity has been advancing in spurts.
Japan's February corporate services prices met expectations.
The rate of decline in corporate services prices was 0.1% in February, as expected. Looking ahead to the price data out later this week, we are looking for the core nationwide CPI to record a 0.6%yr gain, up from 0.5% in January. The headline number is likely to go the other way, edging down to 0.4%yr from 0.5%.
No US data out during the day.
The market remains in wait for the Federal Reserve rate decision tomorrow, for which we expect another statement implying continued action will be heavily conditional on the data flow.
UK mortgage lending healthy.
Figures from the British Bankers Association put mortgage approvals in February up 22.3% from a year earlier. Gross lending was also up a strong 17.5% y/y. The BBAfigures are a signal that lending has remained buoyant, though a more definitive read will come with the Bank of England's lending figures on Wednesday.
Country Release Last Forecast
28 Mar Aust RBA Financial Stability Review
US Mar Consumer Confidence 101.7 102.0
Mar Richmond Fed Index 0 3
FOMC Rate Decision 4.50% 4.75%
Eur M3 Money Supply %yr 7.6% 7.6%
Ger Mar Ifo Business Climate 103.3 102.0
29 Mar NZ Q1 Consumer Confidence 110.1 n/f
Aust Q1 ABS Job Vacancies â€“3.8% â€“3.0%
Latest Research papers/Publication
â€¢ NZ Weekly Forex Outlook (27 March)
â€¢ NZ Q4 GDP Review (24 March)
â€¢ NZ Q4 Current Account Review (23 March)
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)
These papers/publications are available on Online Research on
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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