Sunday June 25, 2006 - 22:30:36 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex: Westpac Institutional Bank Morning ReportNew Zealand Dollar NZ GDP gets subdued reaction
Fridayâ€™s release of Q1 GDP indicated the NZ economy expanded 0.7%, which was in line with expectations. The annual growth nudged higher to 2.0% with the strongest areas of growth coming from government, construction and agriculture. The market saw the figures as being unlikely to change the RBNZâ€™s assessment of inflation pressures and traded a narrow 30 point range. The NZD drifted to a 0.6045 low overnight and we open the week slightly higher around the 0.6070 level as the market looks to this weekâ€™s consumer and business confidence data.
Australian Dollar: AUD uninspired
The AUD saw relatively lacklustre trading on Friday, stuck in a tight 25 point range. The Australian Q1 2006 enterprise bargaining report which was scheduled for release on Friday was again delayed, which added to the quiet trade. The currency traded lower overnight but managed to hold onto 0.7300. A light Australian data calendar this week is not likely to inspire much more as we open today around 0.7310.
Major Currencies: USD strong amid speculation of 50bps hike
The USD was bid on Friday amid rumours of a 50bps rate hike. Traders have now priced in a 90% chance of 50bps tightening over the next two Fed meetings. Friday night saw the dollar rally to two month highs against the EUR, JPY, CHF and GBP. The euro was locked in a tight range 1.2561-83 range all day Friday. During the overnight session ECBâ€™s Weberâ€™s hawkish comments gave the euro a small boost, but dollar strength prevailed. Chinese comments on faster yuan appreciation saw USD/JPY down through 116 during the Asian session on Friday. Overnight USD/JPY traded up to 116.60, and we open just of these levels this morning at 116.50.
US durable goods orders down 0.3% in May.
A modest decline, following Aprilâ€™s 4.7% slump, though the combined pull-back in April-May follows a jump of nearly 10% in the prior two months. The May detail showed aircraft orders down, but gains in cars, machinery and metals. Core capital goods orders were up 1.0%, enough to keep a decent positive trend alive. Durable inventories rose 0.4%, softer than in March/April.
German inflation update.
Early indications from German states point to a modest acceleration in inflation in June, from 1.9% yr in May.
Country Release Last Forecast
26 Jun US May New Home Sales 4.9% â€“5.0%
Jpn May Corp Services Prices %yr â€“0.3% â€“0.2%
Eur Apr Current Account â‚¬bn s.a. â€“3.2 n/f
Ger Jun CPI %yr (Prelim) 1.9% 1.9%
May Retail Sales 2.8% n/f
UK Jun Nâ€™wide House Prices %yr 4.7% 5.5%
27 Jun US May Existing Home Sales â€“2.0% â€“2.0%
Jun Consumer Confidence 103.2 105.0
Jun Richmond Fed Manuf Index 1 8
Latest Research papers/Publication
â€¢ NZ Q1 GDP Review (23 June)
â€¢ NZ Q1 Current Account Review (22 June)
â€¢ NZ Q1 GDP Preview (19 June)
â€¢ NZ Weekly Forex Outlook (19 June)
â€¢ NZ Interest Rate Strategy Weekly (19 June)
â€¢ NZ Q1 Current Account Preview (16 June)
â€¢ NZ Interest Rate Strategy Weekly (13 June)
â€¢ NZ Q1 Terms of Trade Review (12 June)
â€¢ NZ Weekly Forex Outlook (12 June)
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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