Tuesday 6 July 2010

Morning Report
Foreign Exchange Market News and views
Previous Range Today’s Open Expected With very little in the way of fresh economic data and the US closed for
Asia Overnight 8.00am NZD cross Range Today Independence Day, equity markets struggled to make much headway in very
NZD 0.6854-0.6916 0.6859-0.6940 Ð0.6881 0.6850-0.6920
thin trading conditions. In Europe, the Eurostoxx 50 made an early intraday
low of 2506 (-0.8%) following a downward revision to French services PMI. An
AUD 0.8377-0.8451 0.8371-0.8467 Ð0.8392 Ï0.8199 0.8340-0.8440 upwards revision to the German survey, however, helped support stocks which
JPY 87.65-88.01 87.64-87.99 Ï87.77 Ï60.39 87.00-88.20 settled in a tight range for the rest of the session closing down 0.36%. The
EUR 1.2521-1.2567 1.2510-1.2558 Ð1.2543 Ï0.5486 1.2480-1.2600
FTSE100 followed a similar pattern oscillating around flat for most of the session
before dipping at the close to end 0.3% lower. European and UK government
GBP 1.5165-1.5205 1.5090-1.5198 Ð1.5140 Ï0.4545 1.5080-1.5200 bonds were around 3-5bps lower in yield while Spanish bonds underperformed,
rising 9bps, following the news that Caja Madrid Banking Group were to receive
NZ Domestic Market (Previous day’s closing rates) €4.5bn in funding from the Government.
Cash Curve Govt Stock Swap Rates (Qtrly) The euro declined a touch following weekend comments from ECB’s Trichet
Cash 2.75% Nov-11 3.74% 1 Year 3.76% calling for austerity and budget management within the eurozone. EUR/USD
2 Years 4.17%
fell to a low of 1.2509 before bouncing towards the 1.2530 level. Sterling also
30 Days 2.95% Apr-13 4.22% came under pressure, falling one big figure and dipping briefly below 1.51.
3 Years 4.48%
60 Days 3.01%
Apr-15 4.70% 4 Years 4.70% AUD/USD posted its high of the day at the European open, printing 0.8468
90 Days 3.15% before drifting lower ahead of the RBA meeting.
5 Years 4.88%
Dec-17 5.17%
180 Days 3.39% 7 Years 5.16% NZD/USD moved in line with the AUD/USD closing slightly lower on the day at
1 Year 3.72% May-21 5.41% 10 Years 5.45% 0.6867 while AUD/NZD was pretty much unchanged.
No US data. Independence Day holiday.
World Bourses and Indices
Euroland composite PMI unrevised at 56.0 in June, down from recent peak
AUD USD
of 57.3 in April. Also, Euroland retail sales were up 0.2% in May, broadly in line
Cash 4.50% 0.00 Fed Funds 0.00-0.25%
with the subdued national data already available (despite a temporary boost
90 Day 4.88% 0.00 3 Mth Libor 0.53% 0.00 from pre World Cup spending on plasma TVs and other merchandise). This
3 Year Bond 4.54% 0.00 10 Year Notes 2.98% 0.00 followed a 0.9% fall in April and left sales down 0.9% yr.
10 Year Bond 5.07% -0.04 30 Year Bonds 3.95% 0.00
Euroland Sentix investor sentiment rises from –4.1 to –1.2 in July. This
NZX 50 2947.3 +9.2 CRB 254.5 0.0 continues the bounce from the May low of –6.4 which Sentix assessed reflected
S&P/ASX200 4222.1 -16.6 Gold 1208.0 -2.6 institutions “over-reacting” to the initial news of Greek sovereign rating
9266.8 +63.1 293.00 -0.15
downgrades.
Nikkei Copper Fut.
FT100 4823.5 -14.6 Oil (WTI) 72.04 0.00 UK PMI services slips from 55.4 to 54.4 in June. That is its lowest since August
S&P500 Closed – NZ TWI 65.98 +0.08 last year, reflecting slower growth in new business. The austere June budget will
have been a factor at play. Evidence is mounting that the UK economy may be
slowing after the growth blip in H1 2010.
Upcoming Events
Date Country Release Last Forecast
6 Jul NZ Q2 NZIER Business Confidence 22% – Outlook
Aus Jul RBA Policy Decision 4.50% 4.50%
May Int’l Trade Balance, AUDbn +0.134 +0.15 AUD/USD and NZD/USD outlook next 24 hours: The lack of direction from
US Jun ISM Non-Manufacturing 55.4 55.0 the US overnight will probably keep NZD and AUD confined today to their recent
Can May Building Permits 5.4% –2.0% ranges either side of 0.69 and 0.84 respectively. For NZ, the Quarterly Survey
7 Jul US Fedspeak: Kocherlakota of Business Opinion should give the first solid lead on Q2 GDP in relation to the
Eur Q1 GDP (F) 0.2%a 0.2% modest pace of recovery we’ve seen in recent quarters. An on-hold decision by
Ger May Factory Orders 2.8% 0.3% the RBA this afternoon should put some mild support under AUD, though the
UK Jun BRC Shop Prices %yr market hasn’t really bought into the media hysterics about a rate cut.
Can Jun Ivey PMI nsa 62.7 63.5
8 Jul Aus Jun Employment chg 26.9k 15k
Jun Unemployment Rate 5.2% 5.3%
US Initial Jobless Claims w/e 3/7 472k 460k
Jun Chain Store Sales %yr 2.6% –
May Consumer Credit $bn 1.0 –5.0
Jpn May Machinery Orders 4.0% –3.0%
May Current Account ¥bn sa 1380 1200
Jun Bank Lending %yr –2.0% –
Eur ECB Rate Decision 1.00% 1.00%
Ger May Industrial Production 0.9% 0.9% With contributions from Westpac Economics

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