Tuesday June 27, 2006 - 21:24:17 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex: Westpac Institutional Bank Morning ReportNew Zealand Dollar NZD still positioned below 0.6100 before Fed
Pre-Fed housekeeping continues as the NZD remains below 0.6100 and traders remain focused on the FOMC result on Friday. It would seem the market needs no excuse to keep positions limited ahead of the announcement. Despite this the NZD was better bid early yesterday peaking at 0.6085 as a European name bought heavily, however it gave up a lot of the gains hitting a low of 0.6021 overnight. A further deterioration in NZ consumer confidence released overnight was responsible for the sell-off as rising petrol and interest costs combined with a slowing economy continue to impact. The figure was its lowest since Sept 2000. The currency opens around 0.6050.
Australian Dollar: AUD holds feet after sucker punch by Italians
The AUD bounced in sympathy early yesterday, but its gains were capped around 0.7350 as investors remain wary ahead of the FOMC. Domestic buyers took the AUD to the days high which was followed by a gradual drift lower to 0.7314 overnight. With no significant domestic data this week, the currency is treading water ahead of the FOMC, but the Australian market may have also been stunned yesterday by their last minute World Cup exit at the hands of Italy. We open trading today around 0.7325.
Major Currencies: Markets quiet ahead of FOMC
The USD opened softer yesterday, with stops being taken out in the euro above 1.2610, and in the yen below 115.90. USD/JPY traded to a low of 115.86 before bouncing back to above 116. Rumours of an emergency BoJ meeting and talk of Fukui resigning saw USD/JPY trade up to its highs of 116.71 overnight. The rumours were officially denied. Astrong German IFO saw the euro rally off its lows overnight and hawkish comments from ECBâ€™s Garganas added support. The euro failed to sustain the rally, however, and drifted lower over the session. Mixed data out of the US overnight provided little in the way of direction for the dollar with the marketâ€™s sights set on the FOMC later this week.
US existing home sales down 1.2% in May.
Existing home sales maintained their gradual downtrend in May. Their 6.67mn annualized sales pace is the second lowest reading recorded in over two years, although since their peak in June last year, sales are only down 8.3%. That mild pull-back contrasts with the rapid plunges recorded by surveys of both home-builder and home-buyer sentiment.
US consumer confidence edged up 1.0 pt to 105.7
this month, perhaps reflecting steadier equities and gasoline prices, although the June gain was less than the 1.5 pt upward revision to May. Indeed, present situation confidence slipped â€“ again â€“ in June, due in part to further slippage in job market sentiment. That is consistent with the uptrend in continuing jobless claims that began in late April, suggesting that unemployment might be edging higher from the 4.6% jobless rate low recorded in May. Also, the one year consumer inflation expectation fell from 5.6% to 5.1%, reversing most of the April-May spike that has worried some policy-makers.
The Richmond Fed manufacturing survey
was little changed at 4 in June, after falling sharply to 1 in May. But the service sector measure stayed strong and retailing picked up sharply, consistent with other evidence of less weak consumer activity this month. On that point, the weekly retail indicators were mixed, with Redbook edging up to 2.0% from 1.9%, but chain store sales slipping 0.4% after a flat prior week.
The German Ifo business survey resumed its uptrend
with vigour in June, after stalling (at a 15 year high!) earlier in Q2. The latest 1.3 pt gain was driven mainly by current conditions; expectations remain a little below their recent peak from earlier this year. That is a clue that the very successful World Cup soccer tournament, currently taking place in Germany, might be driving sentiment at the moment.
UK mortgage lending data for May
from the British Bankersâ€™ Association was strong, in line with figures from other lenders last week. The Bank of England will publish comprehensive industry-wide data on Thursday June 29.
Country Release Last Forecast
28 Jun NZ May Merchandise Trade NZDmn 19 â€“18
Jpn May Retail Sales %yr â€“0.8% n/f
Ger Jul GfK Consumer Confidence
UK Jun CBI Distrib Trades Survey 9 0
29 Jun Aust Q2 ABS Job Vacancies 4.7% n/f
US Q1 GDP %yr (F) 5.3% 5.7%
FOMC Rate Decision 5.0% 5.25%
Latest Research papers/Publication
â€¢ NZ Q2 Consumer Confidence (28 June)
â€¢ NZ Weekly Forex Outlook (26 June)
â€¢ NZ Interest Rate Strategy Weekly (26 June)
â€¢ NZ Balance of Payments: Follow the money (26 June)
â€¢ NZ Q1 GDP Review (23 June)
â€¢ NZ Q1 Current Account Review (22 June)
â€¢ NZ Q1 GDP Preview (19 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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