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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: UncleBigs who wrote (56770)	3/24/2006 3:51:18 PM
From: Elroy Jetson	Read Replies (1) \| Respond to of 110194

Shrinking NZ economy casts long white cloud over Australian dollar Marc Moncrief -- March 25, 2006 theage.com.au EXPOSURE to New Zealand's shrinking economy has tipped the Australian dollar into its deepest trough for 18 months, and analysts expect the slide to continue. The Aussie fell to US71.04¢ at 5.30pm, down from US71.79¢ at Thursday's close. The Reserve Bank's trade-weighted index, which measures the Australian dollar against a basket of currencies, fell to 60.7, its lowest point since September 2004. The Aussie swung from a high of US71.52¢ to a low of US70.98¢. Last week marked its third straight week of falls. In that period, the Australian TWI has lost nearly 4 per cent - the longest sustained fall since May and the largest sustained fall since December 2004. A weaker currency means importers have to pay higher prices for goods. But exporters - including resource companies responsible for much of the record strength in the Australian sharemarket - appear richer on the domestic market. In the past month, the Aussie dollar has fallen 4 per cent against the US dollar and 5 per cent against the euro. "It's developing a bit of a trend that is going to be that much harder to pull out of," said ABN Amro currency strategist Greg Gibbs. Mr Gibbs said New Zealand's reliance on exports to Australia associated the two countries on international markets, so when New Zealand's currency fell, the effect flowed through. On Thursday, New Zealand announced a record current account deficit for the year to December 31 of $NZ13.69 billion ($A11.88 billion). ANZ's head of market research, Warren Hogan, said the bank had lowered its mid-year target for the Australian dollar from US74¢ to US70¢. He said the Aussie, previously expected to end the calendar year at US70¢, would instead fall to US68¢. Mr Gibbs said the expectation barely topped the notional minimum support base of US67.75¢. "High-end deficit currencies across the world, especially those whose interest cycles have peaked, have come under pressure," he said. Unrest was heightened by the expiry next month of $3 billion in Australian bonds held in Japan. .

To: UncleBigs who wrote (56770)	3/24/2006 3:56:21 PM
From: Elroy Jetson	Respond to of 110194

Australia was smart, they killed their housing bubble two years ago, allowing economic strength elsewhere in the world to buffer the effects of their down-turn. Some housing booms have now fizzled out. In Australia, according to official figures, the 12-month rate of increase in house prices slowed sharply to only 0.4% in the first quarter of this year, down from almost 20% in late 2003. Wishful thinkers call this a soft landing, but another index, calculated by the Commonwealth Bank of Australia, which is based on prices when contracts are agreed rather than at settlement, shows that average house prices have actually fallen by 7% since 2003; prices in once-hot Sydney have plunged by 16%. Britain's housing market has also cooled rapidly. The Nationwide index, which we use, rose by 5.5% in the year to May, down from 20% growth in July 2004. But once again, other surveys offer a gloomier picture. The Royal Institution of Chartered Surveyors (RICS) reports that prices have fallen for ten consecutive months, with a net balance of 49% of surveyors reporting falling prices in May, the weakest number since 1992 during Britain's previous house-price bust. The volume of sales has slumped by one-third compared with a year ago as both sellers and buyers have lost confidence in house valuations. House-price inflation has also slowed significantly in Ireland, the Netherlands and New Zealand over the past year. Economist - "In come the waves - the global housing boom" economist.com .