Monday October 23, 2006 - 22:07:40 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex: Westpac Institutional Bank Morning ReportNew Zealand Dollar Thin trade on Labour Day
The NZD found itself stuck in a tight range yesterday with traders seeing very light flows due to the public holiday. Overnight selling pressure from a US investment bank pushed the currency pair down through the 0.6650 technical support level to an intraday low of 0.6625. Despite the move lower the NZD remained well supported above 0.6600 and will probably remain relatively rangebound ahead of this weekâ€™s key CPI data and rate decision.
Australian Dollar: PPI fails to ignite AUD
Stronger than expected PPI in Australia failed to ignite much of a fire under the AUD but it did manage to break through 0.7600 on its way to a 6 week high of 0.7615 during the local session. Overnight the AUD lost its hard fought ground against the USD to finish on its lows around 0.7565. This was due to a firmer US dollar and selling interest from funds, however the AUD remains well supported on the crosses â€“ especially AUD/JPY which posted a 10 month high of 90.35.
Major Currencies: USD firms as inflations concerns mount
Although the markets expect the Federal Reserve to keep interest rates steady when they release their decision on monetary policy later this week, attention has focussed on the accompanying comments which are expected to focus on concern about mounting inflation concerns. This saw the USD continue to rally against most currencies over the last few days, with softer oil prices and a widening interest rate spread in the USDâ€™s favour also supporting the currency. Elsewhere, the GBP lost all of the recent gains it made on favourable growth expectations as it opens today around 1.8740.
No US data to report.
Canadian retail sales rose 1.0% in August,
exactly in line with Westpacâ€™s above consensus forecast. Auto sales up 4.1% explained much of the strength; ex auto sales were up 0.4%. But with gasoline sales falling due to lower prices, core retailing (ex autos and gasoline) posted a solid 0.8% rise. All up, evidence that the domestic Canadian economy is still in good shape.
Date Country Release Last Forecast
24 Oct US Oct Richmond Fed Index 9 9
Eur Aug Current Account â‚¬bn â€“4.8 n/f
Aug Industrial Orders 1.8% 3.0%
UK Oct CBI Industrial Trends Survey 14 n/f
25 Oct NZ Q3 CPI 1.5% 0.9%
Aust Q3 Headline CPI 1.6% 0.9%
Q3 Avg RBA Core CPI 0.9% 0.8%
US Sep Existing Home Sales â€“0.5% 1.0%
FOMC Rate Decision 5.25% 5.25%
Latest Research papers/Publication
â€¢ NZ Q3 CPI Preview/OCR Preview (18 October)
â€¢ Inflation expectations and the OCR (16 October)
â€¢ NZ Weekly Forex Outlook (16 October)
â€¢ Off the fence (13 October)
â€¢ NZ Economic Overview October 2006 (11 October)
â€¢ Reweighting to the rescue? (10 October)
â€¢ NZ Q3 QSBO Review (10 October)
â€¢ A misleading rev counter? (9 October)
â€¢ NZ Weekly Forex Outlook (9 October)
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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