Wednesday April 4, 2007 - 21:12:43 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex Market News - Westpac Institutional Bank Morning ReportNew Zealand Dollar Employee confidence and fixed mortgage rates higher
The NZD started the day around 0.7194 and had an eventful morning leading into the RBA decision. The Q1 Westpac McDermott Millar Employment Confidence Index edged up for the third straight quarter in a row noting that jobs were plentiful and that job security had improved. In addition the NZ Herald reported that RBNZ Governor Bollard had been in discussions with banks in an effort to raise fixed interest rates. The ‚Äėon hold‚Äô decision from the RBA saw the NZD lose its footing and slip to an intraday low of 0.7165. The currency then spent the rest of the afternoon grinding higher. Offshore trading was whippy and sees NZD/USD slightly higher overall. It opens around 0.7205 this morning.
Australian Dollar: AUD down and up on RBA
The early billing of yesterday‚Äôs RBA decision as ‚Äúone of the most exciting in ages‚ÄĚ certainly held true. The AUD started the day around 0.8120 but sold off hard as the RBA left rates unchanged to post an intraday low of 0.8065. Strong buying interest out of Asia at these lower levels saw the currency rally for the rest of the day to surprisingly return towards 0.8120 ‚Äď the same level before the RBA decision. The offshore session saw further strong demand for AUD taking it to another new high of 0.8193. It opens just shy of this level this morning at 0.8185.
Major Currencies: USD continues to weaken on softer data
The USD continued to weaken yesterday following a report from the ISM showed that non-manufacturing index fell to 52.4 in March compared to market expectations of 55. Earlier in the day a private sector report on jobs numbers suggested that 106,000 jobs were added in March; this is often a volatile number in preview to non-farm jobs which is due out on Good Friday. The release of the 15 British soldiers in Iran however has helped soften the blow for the USD. The euro
opens today just off the overnight highs at 1.3365. The yen
has however fared worse and is opening around 118.70 after hitting a five week high last night at 119.05. The GBP
opens at 1.9750 today.
US non-manufacturing ISM slips to 52.4,
its slowest since the Iraq invasion four years ago. We had expected a decline, because of exceptionally tough seasonal factors, but even so it is clear that the services sector of the US economy has lost some momentum since the turn of the year. It averaged 55.2 in Q1, down from 57.4 in Q4, though it was not too much softer than Q3‚Äôs 55.7 average. Looked at that way, it seems likely that the Q4 rise and Q1 correction lower was largely a weather story, as we have seen in other US economic data.
Plenty of US labour market news overnight.
The ISM showed weaker jobs growth in Mar, but its month to month payrolls predictive ability is not reliable. The revamped and improved ADP private payrolls estimate picked the soft Feb payrolls outcome perfectly; its March estimate of 106k supports the view that employment was stronger last month. Also, the Hudson measure of employee sentiment kept rising (consistent with the Conf Board‚Äôs stronger job market sentiment reading from last week). And Challenger reported that layoff announcements were down sharply last month, and indeed 25% lower than in March last year. The overall message is on the positive side, however Monster.com, the job-listing website, reported weaker sales for Q1, on the back of weaker demand for advertising. Other data included soft factory orders in Feb, up 1.0% after falling 5.7% in Jan.
Canadian building permits fell 22% in Feb,
led by the nonresidential sector, off 29%, but housing was also weak, down 18%. Very volatile data!
The Euroland services PMI slipped slightly to 57.4 in Mar
but still leaves a solid growth picture in place. In Feb, Euroland retailing only recovered 0.3% after falling 0.8% in Jan following the German VAT hike ‚Äď but the early indications for March are that retailing picked up smartly again. German factory orders jumped 3.9% in Feb, led by a surge in the foreign component, pretty much evenly split between orders from elsewhere in Europe and the rest of the world. The UK services PMI edged up to 57.6 in Mar but the Q1 average of 58.1 was down from Q4‚Äôs 59.9.
Country Release Last Forecast
Aus Mar Cashcard Retail Index ‚Äď0.6% n/f
US Initial Jobless Claims w/e 31/3 308k 310k
Ger Feb Industrial Production 1.9% ‚Äď0.6%
UK Feb Industrial Production 0.1% 0.4%
BoE Repo Rate Decision 5.25% 5.25%
Can Mar Employment Chg 14k 20k
Mar Ivey PMI 60.5 64.0
Latest Research papers/Publication
‚ÄĘ NZ Q1 Employment Confidence Index (4 April)
‚ÄĘ NZ Q4 GDP Review (30 March)
‚ÄĘ NZ Q4 Current Account Review (29 March)
‚ÄĘ NZ Q1 Consumer Confidence (28 March)
‚ÄĘ NZ Weekly Forex Outlook (26 March)
‚ÄĘ NZ Q4 GDP Preview (23 March)
These papers/publications are available on Online Research on Westpac
Institutional Bank‚Äôs 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. ¬© 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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