Monday January 29, 2007 - 20:03:17 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex: Westpac Institutional Bank Morning ReportNew Zealand Dollar NZD quiet in holiday thinned trading
It was a quiet day for the NZD with the Auckland anniversary holiday ensuring the currency traded in a narrow 20 point range, albeit with a slight downward bias. With the Federal Reserve meeting later this week, and positive sentiment and data supporting the USD, sentiment appears to have weighed against the NZD. Overnight trading was also muted, with the currency unable to sustain a rally up to 0.6985.
Australian Dollar: Negative sentiment sees AUD struggle
The USDâ€™s return to favour saw the AUD under pressure yesterday as investors focussed on the likelihood of a hawkish statement from the Federal Reserve which in turn will likely weigh against the AUDâ€™s yield attractiveness. Last weekâ€™s poor CPI figure also appears to be counting against the currency with talk that the data will have removed any possibility of the Reserve Bank of Australia needing to raise interest rates when it has the opportunity next month. The currency did attempt a brief rally overnight, however sentiment again weighed against the currency and it opens today just above 0.7710.
Major Currencies: USD climbs to 4-year high against low yielding yen
Yield differentials continue to dominate the currency markets, with a heavy data schedule in the US this week and next weekâ€™s G7 meeting on the horizon. Yen weakness remains a concern for Eurozone finance ministers although Hideto Fujii, Japanâ€™s vice finance minister commented that he had not heard that the currencyâ€™s exchange rate would be discussed at next weekâ€™s meeting. Meanwhile, the USD strengthened to a four year high against the yen at 122.20 and EUR/JPY once again straddled 158. The euro
strengthened to intraday high of 1.2968 against the USD and pushed to an eight year high against the lower yielding Swiss Franc. Sterling
ignored stronger than expected retail sales data and remains below 1.9600.
Japanese retail sales fell 0.3%yr in December.
That compares to an anticipated decline of 0.6% and a previous fall of 0.1%. Sales fell 0.2% in the month, after a 0.1% gain in November. The structurally depressed large store segment (supermarkets and department stores) fell 3.4%yr. These are not flattering numbers. Retail, and consumption more generally, awaits a positive impetus from income growth.
No US data to report.
Canadian manufacturers maintain subdued outlook in Q1.
Despite reporting a slight increase in orders, the StatCan survey found that output expectations for the qtr remained negative, with the -5 reading just marginally improved from -6 in Q4 last year.
UK retailers up-beat.
The Confederation of British Industry's retail survey showed reported sales in January rising from 25 to 30, with expectations for February up-beat as well. This continues the run of robust consumer data that will keep alive expectations of a further rate rise from the Bank of England.
Country Release Last Forecast
NZ Dec Building Consents â€“12.0% 8.0%
Aust Dec NAB Business Survey 14 n/f
US Nov Home Prices %yr (S&PCS) 2.9%
Jan Conf Brd Consumer Confidence 109.0 112.0
Jpn Dec Unemployment Rate 4.0% 4.0%
Dec Industrial Production 0.8% 0.5%
Dec Household Spending %yr â€“0.7% â€“1.3%
Eur Jan Retail PMI 52.1 n/f
Ger Jan CPI %yr 1.4% m/f
Dec Retail Sales â€“0.7% 1.5%
UK Dec Net Consumer Credit Â£bn 1.0 1.0
Dec Net Mortgage Lending Â£bn 9.8 10.0
Can Dec Industrial Product Prices flat 0.3%
Latest Research papers/Publication
â€¢ NZ Weekly Forex Outlook (29 January)
â€¢ NZ Economic Overview January 2007 (25 January)
â€¢ RBNZ OCR Review (25 January)
â€¢ NZ Weekly Forex Outlook (23 January)
â€¢ NZ inflation expectations (18 January)
â€¢ RBNZ OCR Preview (17 January)
â€¢ NZ Q4 CPI Review (17 January)
â€¢ NZ Q4 QSBO Review (16 January)
â€¢ NZ Weekly Forex Outlook (15 January)
â€¢ NZ Q4 CPI Preview (11 January)
â€¢ NZ Q4 Employment Confidence Index (10 January)
â€¢ NZ Q3 GDP Review (21 December)
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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