Wednesday November 8, 2006 - 20:37:36 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex: Westpac Institutional Bank Morning ReportNew Zealand Dollar NZD drifts lower, fails to hold 0.6700
The NZD traded softly on Wednesday and gradually lost ground against the USD throughout the day. The market was circumspect ahead of the closely watched jobs data report out this morning. The data can influence the RBNZ on their monetary policy stance and will help determine whether a rate hike in Dec is on the cards. Overnight, the NZD opened near the high at 0.6725 and failed to hold onto the 0.6700 handle eventually trading a low of 0.6660. NZD/USD opens at 0.6685 this morning.
Australian Dollar: AUD loses ground despite rate hike
The Reserve Bank of Australia raised their cash rate by 0.25% to 6.25% yesterday, a widely expected result. The market focused on the tone of the statement that was less hawkish than anticipated and by consequence weighed on the AUD. The implications of the Democrats winning power in the House of Reps and the stepping down of Rumsfeld indicates less US budget spending on Iraq, more fiscal discipline will help the USD and so the AUD weakness continued. The AUD weakened from 0.7750 to 0.7678 but staged a late recovery to close at 0.7710.
Major Currencies: Little reaction following Democrat gains
Attention on the US mid-term elections is now seen waning with little market reaction to the Democrats gaining control of the House of Representatives and this morningâ€™s announcement of Donald Rumsfeldâ€™s resignation. The euro slipped from an overnight high of 1.2808, dipping to 1.2746, while the greenback strengthened to 118.01 high against the yen. The yen was undermined following comments from the normally hawkish BoJ policy board member Atushi Mizuno, who suggested that Japanese interest rates should only be increased gradually and was unspecific as to timing. Sterling, which ranged between 1.9008 and 1.9098 overnight, remains in focus with the Bank of Englandâ€™s MPC widely expected to raise UK interest rates to 5.00% tonight.
No major US data.
Canadian housing starts up 6.8% in Oct.
A 23% surge in multiple family starts saw total starts post their first gain in four months.
UK consumer confidence higher.
The Nationwide survey showed a surge from 89 to 98 in October, its strongest since January. Falling petrol prices will have helped.
Country Release Last Forecast
NZ Q3 HLFS Employ/Unemploy 1.0%/3.6% 0.0%/3.9%
Aust Oct Employment/Unemploy 31.4k/4.8% 10k/4.8%
US Sep Trade Balance USDbn â€“69.9 â€“64.1
Oct Import Prices â€“2.1% â€“1.1%
Initial Jobless Claims w/e 4/11 327k 320k
Sep Wholesale Inventories 1.1% 0.9%
Nov UoM Consumer Sent (Prelim) 93.6 95.0
Jpn Oct Bank Lending %yr 1.6% 1.6%
Eur ECB Monthly Report
UK Sep Trade Balance Â£bn â€“6.7 â€“6.4
BoE Rate Announcement 4.75% 5.0%
Sep Leading Index 0.2% n/f
Can Sep New House Prices 1.5% 1.2%
Sep Trade Balance CADbn 4.2 3.7
Latest Research papers/Publication
â€¢ NZ Q3 LCI and QES Review (6 November)
â€¢ NZ Weekly Forex Outlook (6 November)
â€¢ NZ Q3 labour market preview (1 November)
â€¢ NZ Weekly Forex Outlook (30 October)
â€¢ NZ RBNZ OCR Review (26 October)
â€¢ NZ Q3 CPI Review (25 October)
â€¢ NZ Weekly Forex Outlook (24 October)
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)
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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