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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Haim R. Branisteanu who wrote (30793)	5/26/2005 11:41:23 AM
From: mishedlo	Read Replies (1) \| Respond to of 116555

DATAWATCH Australian capital expenditure boom may be ending - HSBC Thursday, May 26, 2005 5:17:14 AM afxpress.com SYDNEY (AFX) - The boom in Australian business investment may be ending, HSBC Australia senior economist John Edwards said following the release of the Australian Bureau of Statistics' (ABS) capital expenditure survey for the first quarter The survey showed a sharp fall of 3.8 pct in seasonally adjusted figures in capital expenditure in the final quarter of 2004, but also indicated the possibility of slow capital expenditure in the fiscal year to June 2006 Edwards said it may be merely a passing downturn in sentiment, but if the survey of business investment plans is right the boom is clearly ending He said the 3.8 pct fall in business investment for the first quarter is not by itself that worrying since some of it comes from upward revision to the previous quarter Edwards added that compared with the same quarter in 2004, business investment in the first quarter was up 15.6 pct But, he said, business investment plans for 2005/6 reported to the ABS this month and last month fall short of expected spending for 2004/05 "Our rough calculation applying realization ratios to expected investment in both years shows a slight decline in nominal business investment next year compared to this year," Edwards said He said this is a somewhat sharper growth downturn than is evident in the previous survey, adding that the ABS data show the actual level of spending declining from the current quarter onwards, with the sharpest decline in equipment, plant and machinery rather than building and structures "The projected decline is concentrated in 'other selected industries', which is most of the private sector apart from mining and manufacturing," Edwards said He said a projected decline in nominal spending does not sit well with the Australian government's forecast of a six pct increase in real business investment over the same period -- particularly since that forecast is heavily weighted towards plant and machinery investment Edwards acknowledged survey numbers can change quickly and by large amounts, but said, if today's plans are implemented, Australian output growth over 2005/06 will depend even more heavily on a sharp increase in exports, and a slowdown in the rate of decline in housing construction "Neither are yet convincingly evident," he said Edwards suggested the business investment numbers will discourage the Reserve Bank of Australia (RBA) from contemplating further tightening when its board meets on June 7 to mull over monetary policy Any decision to change the central bank's official cash rate from 5.50 pct will be announced the following day This month the RBA left the rate unchanged for the second consecutive month and following a 25 basis points rise in March -- the first rate increase since December 2003 The central bank is maintaining a tightening bias but has acknowledged that its March rate rise and other factors may have helped to dampen domestic demand and lessen inflationary pressures

To: Haim R. Branisteanu who wrote (30793)	5/26/2005 11:45:42 AM
From: mishedlo	Read Replies (1) \| Respond to of 116555

FOREX-Euro slides as France seen rejecting EU vote Thursday, May 26, 2005 6:49:05 AM reuters.com By Naomi Tajitsu TOKYO, May 26 (Reuters) - The euro fell on Thursday as speculation heated up that France would reject a European Union constitution following a report the country's ruling party had already thrown its hands up in defeat. Traders dumped the single currency after London's Times newspaper said on its Web site that Nicolas Sarkozy, the leader of France's ruling party, had privately admitted the referendum on Sunday would result in a "No" vote. A spokesman for Sarkozy later denied that the leader had said the referendum was already lost. The market also shunned other European currencies, like the Swiss franc and sterling, as such a rejection could throw Europe into political turmoil, dealers said. But with the euro having already lost about 3.5 percent against the dollar so far this month due to political uncertainty and concerns about an economic slump in Europe, some traders did not expect much more selling before the weekend. "The euro has been sold off to this point as the market factors in a 'No' vote, so I don't think it's going to be sold off too much more heading into the weekend. It shouldn't break under $1.25 ahead of the vote," said a trader at a U.S. bank. At 0618 GMT, the euro bought around $1.2540 <EUR=>, easing around 0.5 percent from late New York levels and hovering near the seven-month low of $1.2535 struck on Monday. It was also sold against the Japanese currency, with the euro slipping about 0.3 percent to 135.35 yen <EURJPY=>. The Times report, which did not cite sources, drove the Swiss franc down 0.4 percent to 1.2310 francs per dollar <CHF=>, while sterling eased to $1.8265 <GBP:> from $1.8316 in late U.S. trade. The dollar fetched around 107.90 yen <JPY=>, up 0.2 percent on the day. So far this week the dollar has hovered between a one-month high of 108.30 yen and 107.20 yen. Steady Japanese exporter selling of the U.S. currency in the 108 yen range has stymied any dollar advance, traders said. EURO TAKES HIT The Times report added fuel to the downward drive of the euro, which has been unable to shake off a string of weak economic data. The latest disappointment was Germany's Ifo index of business sentiment on Wednesday, which fell in May to its lowest level in almost two years. By contrast, the strength of the U.S. economy and prospects for the Federal Reserve to keep lifting interest rates have boosted the dollar this year, snapping a three-year slide mainly driven by worries about the current account deficit. The euro zone economy is not the only one struggling. Mounting signs of a slowdown have driven the pound lower in the past month. First-quarter growth in Britain was the slowest in nearly two years, a report showed on Wednesday. "The euro and sterling are at a disadvantage for the time being, fundamentally," said Tomoko Fujii, senior currency strategist at Bank of America in Tokyo. A big focus on Thursday will be Treasury Secretary John Snow's testimony before Congress on the administration's exchange rate manipulation report at 1400 GMT. In that report the Treasury stopped short of accusing China of manipulating the yuan to its trade advantage but effectively gave Beijing a deadline to loosen the yuan's tight 8.28 peg to the dollar before the next report.