Tuesday 10 August 2010

Morning Report
Foreign Exchange Market News and views
Previous Range Today’s Open Expected In the absence of any material market news, US equities looked ahead to
Asia Overnight 8.00am NZD cross Range Today tomorrow’s US central bank meeting where there is some speculation the Fed
NZD 0.7305-0.7339 0.7267-0.7332 0.7287 0.7250-0.7320
may announce some form additional monetary easing. The S&P500 is currently
up 0.5%, grinding steadily higher after the open. Commodities were unchanged
AUD 0.9168-0.9192 0.9153-0.9206 0.9165 0.7951 0.9120-0.9220 overall, the slip in foods balanced by gains in oil (+0.9%) and copper (+0.6%).
JPY 85.30-85.48 85.44-85.91 85.88 62.58 85.30-86.30 Shipping costs posted further gains, large ships (Baltic Capesize) gaining 8.1%.
EUR 1.3274-1.3299 1.3216-1.3308 1.3230 0.5508 1.3200-1.3270
US 3mth Libor shed another 0.7bp to 0.404%. US 2yr treasury yields rose 3bp,
the 10yr unchanged.
GBP 1.5956-1.5996 1.5894-1.5995 1.5908 0.4581 1.5850-1.5950
The US dollar bounced off its four-month low of 80.09 to 80.74 (index terms),
attempting to alleviate an oversold condition. A strong EZ investor confidence
NZ Domestic Market (Previous day’s closing rates) reading couldn’t help the EUR which fell from 1.3308 to 1.3217. The day’s
Cash Curve Govt Stock Swap Rates (Qtrly) underperformer was the CHF which weakened by 1.2% to 1.05. USD/JPY rose
Cash 3.00% Nov-11 3.60% 1 Year 3.65% from 85.55 to 85.91.
30 Days 3.11% 2 Years 3.95% AUD made an intraday peak at 0.9206 just after Sydney closed, slipping to
Apr-13 4.10%
60 Days 3.19%
3 Years 4.18% 0.9154 during the European session and remaining thereabouts.
Apr-15 4.58% 4 Years 4.37%
90 Days 3.26% NZD peaked an hour earlier than the AUD at 0.7330 and slipped as far as 0.7667
5 Years 4.53% before settling around 0.7290. AUD/NZD firmed to 1.2607 before settling 40
Dec-17 5.02%
180 Days 3.43% 7 Years 4.82% pips lower.
1 Year 3.60% May-21 5.33% 10 Years 5.12%
No US data to report.

World Bourses and Indices The Japanese adjusted current account surplus widened to ¥1362.1bn in
June, from ¥904.8bn in May. Exports fell by 0.6% in June, but a near 6% decline
AUD USD
in imports led to an increase in the trade balance in the month. Investment
Cash 4.50% 0.00 Fed Funds 0.00-0.25%
income also rose in June.
90 Day 4.77% -0.01 3 Mth Libor 0.40% -0.01
3 Year Bond 4.67% -0.02 10 Year Notes 2.82% 0.00 The decline in Japanese bank lending moderated to –1.8%yr in July, from
10 Year Bond 5.11% -0.05 30 Year Bonds 4.01% +0.01 –2.0%yr in June. Lending by city banks is 3.7% lower over the year; lending by
regional banks is unchanged from a year ago.
NZX 50 3054.5 +9.9 CRB 274.6 -0.1 European Sentix investor confidence jumps 9.8 pts to 8.5 in August. That
S&P/ASX200 4594.9 +28.8 Gold 1200.8 -3.5 is the highest reading since late 2007 and indicates that optimism about the
Nikkei 9572.5 -69.6 Copper Fut. 336.90 +1.05 global growth story and the weaker euro’s impact on exports has offset concerns
FT100 5410.5 +78.1 Oil (WTI) 81.46 +0.79 about fiscal tightening across Europe, especially now that the bank balance sheet
S&P500 1127.9 +6.3 NZ TWI 67.11 -0.14 stress-testing uncertainty has been resolved.

Upcoming Events
Outlook
Date Country Release Last Forecast
10 Aug NZ Jul Electronic Card Transactions 0.4% 0.0% AUD/USD and NZD/USD outlook next 24 hours: Significant event risk lies
Aus Jul NAB Business Survey 8 – ahead from the FOMC meeting (early tomorrow morning NZT). Until then, the
US Jul NFIB Small Business Optimism 89.0 85.0 previous day’s ranges remain largely intact – 0.9150 to 0.9210. NZD’s boundaries
Q2 Nonfarm Productivity 2.8% 0.0% are 0.7270 and 0.7360, a break below raising the odds a larger reversal has begun.
Q2 Unit Labour Costs –1.3% 1.5%
Jun Wholesale Inventories 0.5% 0.4%
Aug IBD/TIPP Economic Optimism 44.7 44.0
FOMC Rate Decision 0–0.25% 0–0.25%
Jpn Bank of Japan Policy Decision 0.10% 0.10%
UK Jul RICS House Price Balance 9% 5%
Jul BRC Retail Monitor 1.2% –
Jun Visible Trade Balance £bn –8.0 –7.8
Jun DCLG House Prices %yr 11.0% 9.8%
Can Jul Housing Starts 192.8k 184.0
Jun New Housing Price Index 0.3% 0.2%
11 Aug Aus Aug Westpac-MI Cons Sentiment 113.1 –
US Jun Trade Balance $bn –42.3 –42.0
Jul Mthly Budget Statement $bn –180.7 –169
Jpn Jun Machinery Orders %yr –9.1% 5.4% Imre Speizer, Senior Market Strategist, NZ, Ph: (04) 470 8266
Jul Corporate Goods Prices %yr 0.5% 0.0% With contributions from Westpac Economics

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