AUD.NZD

[arco]

Woke up expecting to see a few pips in the bag - but alas not so [V]

New Zealand business confidence improves
From correspondents in Wellington
10oct06

NEW Zealand business confidence improved sharply in the September quarter, a survey showed today, raising expectations the central bank may decide to raise interest rates.


The independent New Zealand Institute of Economic Research (NZIER) survey for the September quarter showed a net 19 per cent of firms expected a deterioration in the general business situation in the next six months.

However, despite being negative, the figure was the least pessimistic for the last 18 months and down from a net 44 per cent in June and 61 per cent in December.

Economists were surprised with figures that showed capacity utilisation increased for the first time since December 2004. Utilisation reached 92.3 per cent in the September quarter, up from 91.4 per cent in the June quarter.

The NZIER acknowledged the figure would be of concern to the central bank.

Reserve Bank of New Zealand governor Alan Bollard last month said he had become less sure that the official interest rate of 7.25 per cent would not need to rise again during the current business cycle.

Despite a slowing of economic growth to 1.9 per cent annually in the June quarter, inflationary pressures remain strong. Inflation is running at 4 per cent, above the 1-3 per cent band within which the central bank is mandated to maintain price rises.

The ANZ Bank said the business confidence data showed the threshold for a rates increase had been crossed.

"Given recent developments, we believe the risk of a hike (in interest rates) is now greater than 50 per cent, and the Reserve Bank will need a strong reason or calamity at this point to pause,'' the bank said.

The BNZ Bank said a combination of intentions by businesses to hire more workers and to raise prices and the leap in capacity utilisation were worrying.

The bank said it had shifted its probability of an interest rate rise this month from 25 per cent to a 40-45 per cent risk.

"However, we can't but think that governor Bollard really doesn't want to do this if he can avoid doing so,'' the BNZ said.

From The Australian

[peat]

even RB governors get squeezed..... !

[peat]

some one posted this Barclays comment on global-view

Barclays: Long AUD/NZD
We see the NZIER survey data as an opportunity to get into AUD/NZD longs ahead of RBA Governor Stevens Wed. We are longing the cross at the reference rata of 1.1276, with a stop loss around the key technical support of 1.1200. We see a hawkish RBA Governor Stevens Wednesday forcing the market to increase the probability of a rate hike in Australia by year end, which will boost the Aussie dollar.Longer term, we expect the RBNZ to stay on hold and not to further hike rates during this tightening cycle. We expect the RBA to hike rates in November, reducing the Kiwi dollar's yield advantage over the Aussie, leading to some shift in carry trades from the Kiwi to the Aussie. We also see a significant chance of a rapid slowing in New Zealand’s economic growth in Q4 and Q1, the precursors of which we see emerging in the data to be released in late Q4. In our opinion, these data will likely see the market begin to price in earlier and steeper rate cuts in New Zealand than it is currently pricing in, which would see a further reductions in carry trades into the Kiwi dollar and bring the weight of New Zealand's record high current account deficit to bear on the Kiwi dollar.

[peat]

[:0]
using this icon to represent a yawn as I'm definitely tiring of this play....
what do you think arco....how much longer should we give it to deliver...

[arco]

Hi Peat

Yes, sometimes these potential moves can
be very frustrating when they sit around.

My position is small so I can afford to hang on
for the time being.

At a current -21 that only equates to -2.1 pips
on a full position.

regards - arco

[peat]

something has happend now [:0] (this time the icon represents genuine surprise)

yeh I have 30K AUD now which is a bit for me and doesnt allow me to open other positions... oh well its looking good now... finally.

[arco]

Hi Peat

Yes, just as I posted the required green candle
appeared as if in response. Big jump of circa 60
for some reason.

So currently + 40, and looking better.

regards - arco

[peat]

Australian Sep Employment +31,400; Consensus +2,500
Australian Sep Unemployment Rate 4.8%; Consensus 4.9%

The further tightening in the labour market suggests an increase in wage pressures that can only add to the
case for a rate hike in November. While new RBA Governor Stevens said Wednesday that September quarter inflation data out later in October will be key, the central bank cannot ignore the inflationary implications from the labour data. (ifr)


The next key event for the cross is the NZ retail sales
tomorrow and there are rumours in the market that this will be a weak number after the 0.5% rise in July.

[arco]

Ah yes, thanks Peat

Just looked at

http://www.news.com.au/business/

and spotted that.

regards - arco

[peat]

a bit off topic here but Arco, as a technical analyst , how much do you concern yourself with fundamental issues such as this information. Some would argue the charts say it all.