Monday November 13, 2006 - 20:16:48 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex: Westpac Institutional Bank Morning ReportNew Zealand Dollar NZD follows AUD lower overnight
It was a quiet day for the NZD yesterday as the currency clung close to 0.6650 in the absence of any intraday direction. However some attention was on this weekâ€™s upcoming retail sales data, with markets appearing reluctant to buy NZDâ€™s ahead of Wednesdayâ€™s release. Significant NZD selling, coupled with USD strength, saw the currency under pressure overnight and it opens this morning just below 0.6600.
Australian Dollar: AUD eases as pressure mounts
The AUD also traded quietly yesterday as the markets ignored a signal from the RBA in its quarterly policy review that interest rates may still possibly have to rise again. The Bankâ€™s main focus was on inflation as it predicted that underlying inflation would likely remain at the top of its 2-3% target band; at the same time they drew attention to the economyâ€™s lack of spare capacity after 15 years of uninterrupted growth. Like the NZD the AUD also fell on the back of broad based USD strength; this morning sees the currency open around 0.7620 after trading slightly below that level overnight.
Major Currencies: USD recovers from lows
The USD has strengthened across the board as investors took profits on the recent good run the majors have had of late. The euro
has fallen from yesterdayâ€™s high of 1.2877 to a low of 1.2799 which is close to todayâ€™s open. Sterling
also has tumbled from its 1Â½ year highs to a low of 1.8998 last night as UK October producer prices brought the annual rise back to 1.7%, compared to a market forecast of 2.3%. The GBP opens today slightly up again at 1.9003. The JPY
weakened following a statement by Shoichi Nakagawa, policy chief of Japans ruling Liberal Democratic Party, in which he stated he opposed tightening of Japans monetary policy. The JPY opens today at its highs of 118.22.
Japanese upstream price pressures ease
a touch. October corporate goods prices fell 0.3%, pushing the annual rate down to 2.8%yr. That compares to a 3.6% rate in September. Final stage domestic demand goods prices are down 0.1%yr, with capital goods (+0.2%mth, +0.1%yr) somewhat stronger than the consumer segment. Pass through from raw materials price gains to final stage goods remains extremely muted based on this evidence.
Japan's current account surplus narrowed in September.
The seasonally adjusted balance fell to Â¥1409bn in September, a decline of some Â¥200bn from August. Both the trade surplus and the services deficit moved adversely in the month. That was partially offset by the income surplus, which widened to Â¥1266bn. We anticipate that the surplus will widen in coming quarters as the income position should remain strong, while declining import prices will boost the trade balance.
US Federal Budget deficit as expected.
The October deficit of $49.3bn was in line with expectations.
UK producer prices rise 0.3% in Oct.
This increase in the core output PPI followed a revised 0.2% rise in Sept, which means that just as energy prices started falling, factory were lifting prices of other products. This will be of concern to the Bank of England.
Country Release Last Forecast
NZ Q3 PPI (Outputs) 2.7% 0.4%
Aust Oct NAB Business Survey 14.2 n/f
US Oct Producer Prices/Core -1.3%/0.6% -0.7%/0.1%
Oct Retail Sales/Ex Autos & Gas -0.4%/0.8% -0.6%/0.4%
Nov IBD/TIPP Economic Optimism 52.4 -53.0
Sep Business Inventories 0.6% 0.6%
Fedspeak: Poole, Minehan and Yellen
Jpn Q3 GDP s.a. annâ€™lsd 1.0% 1.8%
Eur Q3 GDP Advance 0.9% 0.7%
Ger Nov ZEW Expectations Survey -27.4 -30.0
Q3 GDP 0.9% 0.7%
UK Oct CPI %yr 2.4% 2.5%
Latest Research papers/Publication
â€¢ NZ Weekly Forex Outlook (13 November)
â€¢ NZ Q3 HLFS Review (9 November)
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)
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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