Tuesday September 12, 2006 - 21:52:27 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex: Westpac Institutional Bank Morning ReportNew Zealand Dollar NZD holds ground
A lacklustre day saw the NZD trade in a tight range ahead of the RBNZ interest rate decision on Thursday. The currency showed some resilience despite the overall bearish trend to hold its ground above the low of 0.6378. Late afternoon saw the NZD rally back toward the 0.6400 level as it followed the euro higher. Overnight the currency rallied through stops around the 0.6425-30 level to post a session high of 0.6440 on the back of talks of fresh Uridashi issuance and a softening USD. This morning it opens around 0.6415 having retreated from the highs seen overnight.
Australian Dollar: AUD survives brush with 0.7500
The AUD started the day understandably heavy after gold had crashed through $600 for the first time since late June. As a result the AUD touched a low of 0.7501 but there were reportedly keen bids at 0.7500 and the pair later pressed a little higher, citing support from potential M&A flows. A soft NAB business survey kept a lid on any potential move higher and as a result the AUD traded in a tight range until late afternoon when it pushed through 0.7520. This momentum continued overnight as the AUD reached a high of 0.7540 before the sellers returned to knock the currency back towards the 0.7500 level where it opens this morning.
Major Currencies: Record US trade deficit fails to halt USD
The dollar continued to strengthen yesterday against the JPY and euro despite a record US trade deficit in July of $68bn. A survey on US consumer confidence out last night showed optimism in economic outlook, personal finance and government decisions. It is suspected that this optimism has a lot to do with the recent fall in gasoline prices. The JPY
reached 118.15 against the USD as traders abandon the chance of further interest rate hikes in Japan this year. Today the yen opens at 117.93. The euro peaked at 1.2740 but was sold back to todayâ€™s open of 1.2691. The Sterling
has turned a corner and rallied back to a high of 1.8765 following the Aug CPI data.
The Domestic Corporate Goods Price Index (CGPI) rose 0.2% in Aug, holding the annual pace at 3.4%yr. Aug consumer confidence slips to 47.6 from 48.6 in July.
US trade deficit hits record $68bn.
The trade deficit widened by $3.2bn to a new record in July, with exports falling by over a billion dollars and imports rising by almost twice that. Excluding petroleum products, the deficit widened by $2.2bn, so this is not just an oil price story. With a big chunk of the imports gain due to volumes, the real imports rise was 0.6%.
The early Sep consumer sentiment report from IBD/TIPP
is the first of the monthly indicators of how consumers are feeling. It jumped to a seven month high at 50.5, which we suspect was due to falling gasoline prices â€“ the near 10% fall in the average retail price over the last few weeks is the steepest decline seen so far this year.
Canadian trade surplus lower at C$3.9bn.
Despite a solid export performance, the trade deficit narrowed in July due to a surge in imports. Juneâ€™s surplus was also revised lower due to a sharp upward revision on the import side.
UK CPI back to its recent cyclical high of 2.5% in Aug.
This was due to a partial rebound in the core rate. In contrast, the transport component was constrained by a lower rise in petrol prices than at this time last year.
UK PM Blair leaks jobless data?
In a speech to the Trade Union Congress, PM Blair said that tonightâ€™s unemployment report for Aug would likely show a fall. The government does get the data early; markets are forecasting a 4k rise in claimant count unemployment, so maybe that is pessimistic.
Country Release Last Forecast
NZ Jul Retail Sales 0.1% 0.5%
Aust Sep WBC-MI Consumer Sentiment â€“16.2% n/f
US Aug Federal Budget â€“51.3 â€“60.8
Jpn Jul Current Account Â¥bn 1017 1766
Jul Capacity Utilization 106.2 n/f
BoJ Meeting Minutes
Ger Aug CPI %yr (F) 1.7%a 1.7%
UK Aug Unemployment chg 2k 4k
Aug House Prices net bal % 31 31
Can Q2 Capacity Utilisation 85.9% 85.5%
Q2 Labour Productivity 0.5% flat
Latest Research papers/Publication
â€¢ NZ Q2 Terms of Trade Review (11 September)
â€¢ NZ Weekly Forex Outlook (11 September)
â€¢ NZ Sep RBNZ MPS Preview (8 September)
â€¢ El Nino conditions in NZ? (6 September)
â€¢ NZ manufacturing sector trends (4 September)
â€¢ NZ Weekly Forex Outlook (4 September)
â€¢ NZD: Due for a dose of reality
â€¢ NZ Weekly Forex Outlook (28 August)
â€¢ Trends in retail sector profitability (21 August)
â€¢ NZ Weekly Forex Outlook (21 August)
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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