Forex Exchange Morning Report

Daily Forex Fundamentals | Written by Westpac Institutional Bank | Nov 28 08 01:30 GMT |

News And Views There was no market-moving news last night, and the US had their Thanksgiving holiday which deprived global markets from any clues regarding short-term direction. NZD: Stable in a narrow 55 to 55.5 cent range yesterday, sellers attempted pushing it lower when Europe opened, but the dip to 0.5464 only lasted an hour. It is back to the upper end of yesterday's range, at 0.5540. Yesterday's main release, the business confidence survey, surprised by falling again to -43%; New Zealand's real economy is now starting to feel the effects of the global crisis. A quiet day in the interest rate markets, apart from the Government bond tender which was well received. The AUD trended upwards in a 65 to 66 cent range last night, and currently sits at the upper end. It outperformed the NZD in Europe, the cross rate now at 1.19. A range of European economic sentiment indicators was released last night, mostly negative, which failed to dampen the cautious optimism regarding the EUR, but kept it confined to a sideways trajectory along the 1.29 level. USD/ JPY only managed a 0.5 Yen range, and is stable at 95.40. It too received a raft of negative indicators yesterday. No US data due to Thanksgiving holiday. German unemployment fell 10k in November, leaving the unemployment rate at 7.5%. The labour market is a lagging indicator, and the effects of slowing growth are likely to see jobless numbers climb next year. Eurozone confidence surveys were mostly weaker again in November. Overall economic sentiment fell from 80.0 to 74.9, worse than expected and closing in on the record low of 73.0 recorded in 1993. Consumer sentiment was unchanged at -25 as lower fuel prices improved consumers' purchasing power, but industrial sentiment fell further from -18 to -25 and services sentiment dropped from -7 to -12. Eurozone money supply growth held steady at 8.7% yr, against expectations of a marked slowdown. Risk aversion and demand for liquidity are likely to be holding up growth, as investors sell out of other assets and move into cash and liquid assets that are included in the M3 measure. The growth rate of lending to households slowed further to 3.3% yr. The Nationwide UK house price index fell 0.4% in November, less than expected, which saw the annual rate of decline ease slightly to 13.9%. Nationwide warned that UK house prices could fall another 15% over the next year, and that the mortgage market will shrink by 80 percent this year. Outlook The positive short-term tone in NZD remains, with 0.5480 to 0.5550 likely to hold today. Yesterday's US Thanksgiving holiday will result in a very quiet day for New Zealand's markets Date Country Release Last Forecast 28-Nov NZ Oct Building Consents s.a. 8.40% –7.6% Aus Oct Private Credit 0.70% 0.50% Jpn Nov Nomura/JMMA PMI 42.2 – Oct Jobless Rates 4.00% 4.20% Oct Household Spend %yr –2.3% –3.5% Nov Tokyo CPI %yr 1.20% 1.10% Oct National CPI %yr 2.10% 1.70% Oct Industrial Prodn %mth 1.10% –2.5% Oct Retail Trade %yr –0.4% –1.0% Nov Small Bus Confidence 37.6 – Oct Construction Orders %yr 10.30% – Eur Nov CPI Flash %yr 3.20% 2.70% Oct Unemployment Rate % 7.50% 7.60% UK Nov GfK Consumer Confidence –36 –36 Nov CBI Distrib Trades Survey –27 –35 Can Q3 Current Account C$bn 6.8 5.2 Oct Industrial Product Prices –1.2% –2.2% 1-Dec Aus Q3 Company Profits 14.30% 5.50% Nov MI-TD Inflation Gauge –0.2% – US Nov ISM Manufacturing 38.9 38.2 Westpac Institutional Bank http://www.wib.westpac.co.nz/ Disclaimer All customers please note that this information has been prepared without taking account of your objectives, financial situation or needs. 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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.