Monday February 26, 2007 - 21:33:34 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex Research: Westpac Institutional Bank Morning ReportNew Zealand Dollar Data releases almost assure a rate hike next week
It was a quiet start for the NZD yesterday until the release if a larger than expected trade deficit for January. The data was released at -$833m against expectations of -$671m, prompting the NZD to fall 20 points. However, with sentiment remaining bullish for the currency the NZD soon recovered prompted further by the release of the NBNZ survey which showed its highest reading since March 05. Further strength above 0.7100 was noted overnight with the currency opening strongly today.
Australian Dollar: Sidelined for much of the day
The AUD was largely sidelined yesterday narrow without any local data for direction failed to generate much support trading in a range around the .0.7930 level. Slight gains were posted against the USD as the bearish sentiment towards the US currency continues, fuelled by a rally in the price of gold and oil, and increasing tensions between Iran and the US. Light buying in AUD/JPY by Japanese banks has also helped keep AUD supported.
Major Currencies: Dollar pauses ahead of heavy data week
The USD softened against the yen after failing to make any headway through 121.00 as market players trimmed short yen positions. Also helping the yen was a wave of carry trade unwinding after a little jawboning by the Japanese Chief Cabinet Secretary who said that an â€śend to deflation was in sightâ€ť although he failed to elaborate. The euro failed to crack the psychological 1.3200 level against the dollar and retreated to 1.3150, weighed down by sellers against the yen as it conceded ground to end the session below 159.00. Overall the market was in a cautious mood ahead of a heavy data week in the US with Durable Goods Orders, revised GDP, Consumer Confidence, & ISM Manufacturing all offering a look into the emerging fundamental themes underpinning the economy in the past few weeks.
No major US data.
German consumer confidence slipped from 4.9 to 4.4.
This survey was conducted in early Feb but is labelled March as it purports to reflect buying intentions in a monthâ€™s time. This latest reading is the third consecutive fall, suggesting that the early January VAT increase is being felt by consumers.
Country Release Last Forecast
NZ RBNZ inflation expct. 1-yr ann% 3.0% _
RBNZ inflation expct. 2-yr ann% 2.7% _
Jpn Feb small business confidence 48.5 â€“
Eur Jan money supply M3 %yr 9.7% 9.3
Feb retail PMI 47.9 50.0
UK Jan mortgage lending â€“ â€“
US Jan durable goods orders 3.1% â€“5.0%
Dec home prices %yr 1.7% â€“
Jan existing home sales â€“0.8% 2.0%
Feb consumer confidence 110.3 109.0
Feb Richmond Fed PMI â€“11 â€“2
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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