Tuesday January 30, 2007 - 20:28:44 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex: Westpac Institutional Bank Morning ReportNew Zealand Dollar Negative sentiment weighs on NZD
The NZD traded within a relatively tight range throughout the day with the only blip being a small move lower after weaker than expected building consents data. This saw the NZD marked down to the lows of the day from 0.6950/55 before rebounding back to 0.6960 inside 1 minute. Overnight the NZD came under pressure from a number of US investment banks eager to sell the currency not only against the USD but also against the crosses with NZD/AUD and NZD/JPY falling hard. This move lower was further exacerbated by sell recommendations from a number institutions. As a result stop losses around 0.6920 were triggered and this opened the way for a move back below 0.6900 where it currently sits as we go to print.
Australian Dollar: Negative sentiment sees AUD struggle
It was a fairly quiet day for the AUD with the currency pair finding itself stuck in a 0.7716/38 range with little direction. Not much changed overnight with the only action being a sharp move down to 0.7702 as AUD was dragged lower by a weaker NZD. This was short lived though and AUD quickly rebounded back above 0.7720 where it opens today.
Major Currencies: USD in familiar ranges ahead of FOMC
The USD traded within familiar ranges yesterday, ahead of tomorrow morningâ€™s FOMC announcement and a host of data releases scheduled over the next three days and culminating with Fridayâ€™s payroll data. USD/JPY
pulled back from 122.00, dipping to 121.47, while the euro
strengthened to a 1.2982 high. European concerns regarding yen weakness continue, with German Finance Minister Peer Steinbrueck, who will chair next weekâ€™s G7 meeting in Essen, commenting that exchange rates and specifically the EUR/JPY cross would be discussed. Sterling
ranged between 1.9598 and 1.9697 as softer housing data was offset by M&A related buying.
Dec industrial production rose 0.7% , putting the annual rate at 4.6%. While the jobs to applicants ratio rose to 1.08 in Dec (up from 1.06), the unemployment rate rose to 4.1%. Employment was biased lower by an unusually large decline in agricultural employment of 6.2% in the month. The household spending data remained weak at â€“1.9%yr.
US consumer confidence edges up from 110.0 to 110.3 in Jan.
Consumer confidence only rose modestly in Jan, although Decâ€™s decent gain was revised up by a full point to 4.7 pts, making a combined two month gain of 5.0 pts. The Jan rise was constrained by expectations slipping a little (possibly a function of rising fuel prices); the present situation index gain was led by the job market component, hitting its highest since mid 2001. Thatâ€™s helpful for our above consensus 200k payrolls forecast gain for January!
Other US news.
Chain store sales fell 0.9% in the week ended 20/1, the first fall in eight weeks, and almost certainly cold weather related. But the Redbook was unchanged at 1.6%. House prices as reported by S&P/CaseShiller fell for the fourth month running in Nov, but remained positive in annual terms, up 1.7% yr.
Canadian Dec industrial product prices rose 1.4%,
their first decent gain since July. Prices for both energy and other products rose.
Euroland retail PMI dipped to 47.9,
near a two year low, in Jan, led by an 11 pt plunge in the German index. This suggests that the 3% VAT hike at the start of the month had some impact. However the preliminary German CPI rose to 1.6% yr in Jan, suggesting less than expected impact from the VAT hike.
UK credit/housing data.
Consumer credit growth Q4, seemingly unaffected by the Nov rate rise. Mortgage data were less easy to interpret, with the number of approvals falling very sharply in Dec, despite a record high value for net lending (new mortgages less repayments). The implication is that average loan size increased sharply last month, which is to some extent plausible given the rapid increase in house prices in late 2006. Note however some steam coming out of the market this month, according to the Nationwide survey, which showed prices decelerating from 10.5% yr to 9.3% yr.
Country Release Last Forecast
NZ Dec Merchandise Trade Bal NZDmn â€“784 â€“380
Aust Dec Credit 1.1% 1.0%
US Jan ADP Private Payrolls â€“40k 120k
Q4 GDP advance % annâ€™lsd 2.0% 3.0%
Q4 Employment Cost Index 1.0% 0.9%
Dec Construction Spending â€“0.2% 0.5%
Jan Chicago PMI 51.6 51.5
FOMC Rate Decision 5.25% 5.25%
Jpn Dec Housing Starts %yr 4.0% 8.5%
Dec Construction Orders %yr 9.2% n/f
Eur Jan Consumer/Econ Confidence â€“6/110.1 â€“6/110.0
Jan Business Climate Index 1.60 1.58
Jan CPI Flash %yr 1.9% 2.3%
Dec Unemployment Rate 7.6% 7.5%
Ger Jan Unemployment chg â€“108k â€“20k
UK Jan GfK Consumer Confidence â€“8 â€“9
Can Nov GDP flat 0.3%
Latest Research papers/Publication
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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