Sunday April 15, 2007 - 21:04:16 GMT
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Westpac Institutional Bank - www.westpac.co.nz
Forex Market News - Westpac Institutional Bank Morning ReportNew Zealand Dollar NZD flies on retail sales surprise stunner!!
The NZD opened strongly on Friday morning as traders looked to cover short positions ahead of retail sales data. This helped the currency clear the previous high of 0.7313 en route to 0.7323 before settling back to around 0.7310 ahead of the release. A much stronger than expected retail sales number saw the NZD jump 40 points to a 23 month high of 0.7350 and interest rates sell off by 8-10bps with the 2 year swap rate now above 8% for the first time since 1998. Overnight the bullish sentiment continued with the NZD posting a new high of 0.7380, and this morning we open even higher around 0.7390 with the focus now clearly on Q1 CPI data out on Wednesday this week.
Australian Dollar: AUD reaches 16 year high
A combination of buoyant commodity prices, M&A flows and a weaker USD have all contributed towards a stronger AUD with the currency pair climbing four cents in the past month. On Friday itreached a 16 year high of 0.8331 and went a little higher overnight before pulling back to spend the rest of the session washing around a 0.8310 to 0.8330 range, with the market reluctant to push higher.
Major Currencies: G7 statement sees no change
opened around 119.00 on Friday and came under selling pressure just before midday as news of a large Asian property transaction hit the wires. Stop loss levels were taken out at 118.80 and the pair continued to slide to an intraday low of 118.20. In contrast the euro and GBP were both well bid during the local session. Offshore trading saw EUR/USD trade through stop loss levels at both 1.3530 and 1.3550 and the currency eventually peaked at 1.3555. The euroâ€™s fortunes were helped as an ECB member was quoted as saying that the eurozone can absorb a hard landing in the US. The outcome of the weekendâ€™s G7 was unexciting with no change in the statements currency section. Elsewhere USD/JPY recovered from its lows to push to a high of 119.58 as the G7 disregarded recent JPY weakness.
US consumer sentiment falls 3.1pts to 85.3 in Apr.
The preliminary read on consumer sentiment from the UoM was a steeper fall than the consensus was expecting, although the IBD-TIPP sentiment measure released earlier this week did warn that sentiment was eroding. In both measures, the decline was led by a deteriorating assessment of the economic outlook â€“ hardly surprising given all the recession talk of the last month (misplaced in Westpacâ€™s view!). The UoM report also found higher inflation expectations, a function of the recent renewed rise in gasoline prices.
US producer prices jump 1.0% in Mar.
The PPI was boosted by an 8.7% surge in energy and a 1.4% rise in food (the fourth month in a row above 1%) but elsewhere factory gate prices were mostly subdued â€“ hence the flat core rate. That corrected for the above trend 0.4% rise in Feb, with swings in light truck prices continuing to be a dominating factor. Further up the production line, core crude prices posted a very large rise, nearly 8% in the month, reflecting the recent surge in non energy commodity prices.
US trade deficit $58.4bn in Feb.
The trade deficit narrowed even more than we expected, due to a sharp fall in the volume of oil imports (down from 418mn barrels to just 332mn). Slightly lower average prices also helped. Those factors pulled down imports enough to offset the slump on the export side, which was broad-based outside of autos and food. Excluding oil, the deficit actually rose $3bn! With import prices surging in March, and oil import volumes sure to correct from Febâ€™s abnormal low, the deficit is set to widen sharply, to perhaps as high as $63bn.
Canadian trade surplus C$4.8bn in Feb.
Weak US energy imports in Feb did not show up in the Canadian data, where exports of energy and exports to the US both grew. Even so, the Canadian trade surplus narrowed by $1bn, mainly due to weaker automotive and industrial exports.
Euroland industrial production up 0.6% in Feb.
The industrial sector bounced back in February but so far this year it has failed to build upon the solid IP momentum we saw in Q4 last year.
Country Release Last Forecast
NZ Mar REINZ house prices (due 16-20th) 13.6% n/f
US Mar Retail Sales/ex auto 0.1%/-0.1% 0.6%/0.8%
Apr Empire Manufacturing Index 1.9 15.0
Feb Total Net TIC Data USDbn 74.6 n/f
Feb Business Inventories 0.2% 0.3%
Apr NAHB Housing Market Index 36 38
Jpn Feb Capacity Utilisation - Level 106.1 105.9
Eur Mar CPI (F) 1.9%a 1.9%
UK Apr Rightmove House Prices %yr 12.2% n/f
Feb House Prices %yr 10.9% 11.3%
Mar Producer Prices %yr 2.7% 2.6%
Can Feb New Motor Vehicle Sales -3.3% -4.0%
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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