Tuesday 22 June 2010

Morning Report
Foreign Exchange Market News and views
Previous Range Today’s Open Expected
Markets failed to advance the China-inspired risk rally past the Asian
Asia Overnight 8.00am NZD cross Range Today session. The S&P500 physical index gapped higher at the open, but this was
NZD 0.7076-0.7140 0.7082-0.7153 Ð0.7091 0.7020-0.7100 simply reflecting its futures counterpart’s earlier gains. Indeed, S&P500 futures
peaked around the Sydney close, and started a retreat which has seen all the
AUD 0.8752-0.8830 0.8767-0.8860 Ð0.8774 Ï0.8082 0.8730-0.8800
previous day’s gains reversed. The index is currently down 0.6%, and the VIX
JPY 90.01-90.97 90.63-91.48 Ï91.05 Ï64.560 90.50-91.50 barometer of risk aversion has risen slightly. Commodities in aggregate posted
EUR 1.2368-1.2490 1.2310-1.2467 Ð1.2325 Ï0.5753 1.2280-1.2360 only modest gains, but copper is 1.6% higher on expectations a stronger Chinese
currency will stimulate imports. US 10yr treasury yields reversed Asian session
GBP 1.4808-1.4886 1.4752-1.4936 Ð1.4759 Ï0.4805 1.4700-1.4820
gains to be only 2bp higher at the time of writing.

NZ Domestic Market (Previous day’s closing rates) The US dollar index did a u-turn with risk sentiment and is 0.4% higher on the
day, forming a bullish key day reversal. EUR peaked at 1.2468 at the NZ close
Cash Curve Govt Stock Swap Rates (Qtrly) and declined to 1.2305 thereafter, also forming a (bearish) key day reversal.
Cash 2.75% Nov-11 3.81% 1 Year 3.83% USD/JPY rose to 91.50 and reversed during Europe to 90.90.
30 Days 2.89% 2 Years 4.38%
Apr-13 4.41% AUD peaked at 0.8860 around the Sydney close, and then posted an orderly
3 Years 4.69%
60 Days 2.99% decline to 0.8760.
Apr-15 4.88% 4 Years 4.93%
90 Days 3.09% NZD fell from its overnight peak of 0.7153 to 0.7075. AUD/NZD was steady
5 Years 5.11%
Dec-17 5.33%
180 Days 3.36% 7 Years 5.38% between 1.2355 and 1.2400.
1 Year 3.77% May-21 5.56% 10 Years 5.65% Japanese all-industry activity index increased by 1.8% in April after
declining by 0.7% in March (previously –0.8%). Over the year, the all-industry
World Bourses and Indices index is up 3.8% on gains in the tertiary and manufacturing sectors.
AUD USD UK house prices rose 0.3% for June, lifting the annual rate of increase to
Cash 4.50% 0.00 Fed Funds 0.00-0.25% 5.0% according to Rightmove. Note that this survey measures asking prices,
90 Day 4.94% -0.02 3 Mth Libor 0.54% 0.00 which didn’t fall as much as actual sale prices during the recession, and hence
3 Year Bond 5.00% +0.09 10 Year Notes 3.25% +0.02 haven’t rebounded as sharply.
10 Year Bond 5.46% +0.08 30 Year Bonds 4.16% +0.01

NZX 50 3068.2 +20.7 CRB 263.7 +0.8 Outlook

S&P/ASX200 4612.6 +60.7 Gold 1231.6 -24.8
Nikkei 10238.0 +243.0 Copper Fut. 293.05 +4.65 AUD/USD and NZD/USD outlook next 24 hours: A more neutral backdrop
FT100 5299.1 +48.3 Oil (WTI) 77.82 +0.66 for commodity currencies today means they are vulnerable to correcting their
S&P500 1109.1 -8.4 NZ TWI 68.14 +0.20 14-day rallies. AUD should pull back to at least 0.8730 to cover yesterday’s gap.
NZD remains inside its multi-month channel, and we favour a pullback towards
0.7020.
Upcoming Events
Date Country Release Last Forecast
22 Jun NZ May Credit Card Transactions –1.2% –
US Jun Richmond Fed Factory Index 26 15
May Existing Home Sales 7.6% 5.0%
Apr House Prices 0.3% 0.3%
Eur Apr Current Account Balance €bn 1.7 –
Jun Consumer Confidence Adv –18 –20
Ger Jun IFO Business Climate Index 101.5 100.0
UK Emergency Budget
Can May CPI %yr 1.8% 1.3%
23 Jun NZ Q2 Employment Confidence Index 103.6 –
Q1 Current Account NZDmn s.a. –3,110 –1,030
US May New Home Sales 14.8% –25.0%
FOMC Rate Decision 0–0.25% 0–0.25%
Eur Jun PMI Factory Advance 55.8 55.0
Jun PMI Services Advance 56.2 55.5
Ger Jul GfK Consumer Confidence 3.5 3.3
UK Jun BoE Policy Meeting Minutes
May Bank Mortgage Lending £bn 35.7 36.0
Jun CBI Distributive Trades Survey –18 – Imre Speizer, Senior Market Strategist, NZ, Ph: (04) 470 8266
Can Apr Retail Sales 2.1% –0.8% With contributions from Westpac Economics

Westpac Banking Corporation ABN 33 007 457 141 incorporated in Australia (NZ division). Information current as at 22 June 2010. All customers please note that this information has been prepared without taking account of your objectives,
financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation or needs. Australian customers can obtain Westpac’s financial services
guide by calling +612 9284 8372, visiting www.westpac.com.au or visiting any Westpac Branch. The information may contain material provided directly by third parties, and while such material is published with permission, Westpac accepts
no responsibility for the accuracy or completeness of any such material. Except where contrary to law, Westpac intends by this notice to exclude liability for the information. The information is subject to change without notice and Westpac
is under no obligation to update the information or correct any inaccuracy which may become apparent at a later date. Westpac Banking Corporation is registered in England as a branch (branch number BR000106) and is authorised and
regulated by The Financial Services Authority. Westpac Europe Limited is a company registered in England (number 05660023) and is authorised and regulated by The Financial Services Authority. © 2010 Westpac Banking Corporation. 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.