8/9/2019 Westpack AUG 10 Mornng Report

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Morning Report

Westpac Banking Corporation ABN 33 007 457 141 incorporated in Australia (NZ division). Information current as at 10 August 2010. All customers please note that this information has been prepared without taking account of yourobjectives, 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 Westpacsfinancial 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 withoutnotice 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) andis 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 BankingCorporation. 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 arebased 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.

Tuesday 10 August 2010

NZ Domestic Market (Previous days closing rates)

Govt Stock

Nov-11 3.60%

Apr-13 4.10%

Apr-15 4.58%

Dec-17 5.02%

May-21 5.33%

Cash Curve

Cash 3.00%

30 Days 3.11%

60 Days 3.19%

90 Days 3.26%

180 Days 3.43%

1 Year 3.60%

Swap Rates (Qtrly)

1 Year 3.65%

2 Years 3.95%

3 Years 4.18%4 Years 4.37%

5 Years 4.53%

7 Years 4.82%

10 Years 5.12%

World Bourses and Indices

USD

Fed Funds

3 Mth Libor

10 Year Notes

30 Year Bonds

CRB

Gold

Copper Fut.

Oil (WTI)

NZ TWI

AUD

Cash

90 Day

3 Year Bond

10 Year Bond

NZX 50

S&P/ASX200

Nikkei

FT100

S&P500

4.50% 0.00

4.77% -0.01

4.67% -0.02

5.11% -0.05

3054.5 +9.9

4594.9 +28.8

9572.5 -69.6

5410.5 +78.1

1127.9 +6.3

0.00-0.25%

0.40% -0.01

2.82% 0.00

4.01% +0.01

274.6 -0.1

1200.8 -3.5

336.90 +1.05

81.46 +0.79

67.11 -0.14

Foreign Exchange Market

Previous Range Todays Open Expected

Asia Overnight 8.00am NZD cross Range Today

NZD 0.7305-0.7339 0.7267-0.7332 0.7287 0.7250-0.7320

AUD 0.9168-0.9192 0.9153-0.9206 0.9165 0.7951 0.9120-0.9220

JPY 85.30-85.48 85.44-85.9185.88 62.58 85.30-86.30

EUR 1.3274-1.3299 1.3216-1.3308 1.3230 0.5508 1.3200-1.3270

GBP 1.5956-1.5996 1.5894-1.5995 1.5908 0.4581 1.5850-1.5950

News and views

In the absence of any material market news, US equities looked ahead totomorrows US central bank meeting where there is some speculation the Fedmay announce some form additional monetary easing. The S&P500 is currentlyup 0.5%, grinding steadily higher after the open. Commodities were unchangedoverall, the slip in foods balanced by gains in oil (+0.9%) and copper (+0.6%).Shipping costs posted further gains, large ships (Baltic Capesize) gaining 8.1%.US 3mth Libor shed another 0.7bp to 0.404%. US 2yr treasury yields rose 3bp,the 10yr unchanged.

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 confidencereading couldnt help the EUR which fell from 1.3308 to 1.3217. The daysunderperformer was the CHF which weakened by 1.2% to 1.05. USD/JPY rosefrom 85.55 to 85.91.

AUD made an intraday peak at 0.9206 just after Sydney closed, slipping to

0.9154 during the European session and remaining thereabouts.

NZD peaked an hour earlier than the AUD at 0.7330 and slipped as far as 0.7667before settling around 0.7290. AUD/NZD firmed to 1.2607 before settling 40pips lower.

No US data to report.

The Japanese adjusted current account surplus widened to 1362.1bn inJune, from 904.8bn in May. Exports fell by 0.6% in June, but a near 6% declinein imports led to an increase in the trade balance in the month. Investmentincome also rose in June.

The decline in Japanese bank lending moderated to 1.8%yr in July, from2.0%yr in June. Lending by city banks is 3.7% lower over the year; lending byregional banks is unchanged from a year ago.

European Sentix investor confidence jumps 9.8 pts to 8.5 in August. Thatis the highest reading since late 2007 and indicates that optimism about theglobal growth story and the weaker euros impact on exports has offset concernsabout fiscal tightening across Europe, especially now that the bank balance sheetstress-testing uncertainty has been resolved.

Outlook

AUD/USD and NZD/USD outlook next 24 hours: Significant event risk liesahead from the FOMC meeting (early tomorrow morning NZT). Until then, theprevious days ranges remain largely intact 0.9150 to 0.9210. NZDs boundariesare 0.7270 and 0.7360, a break below raising the odds a larger reversal has begun.

Imre Speizer, Senior Market Strategist, NZ, Ph: (04) 470 8266

With contributions from Westpac Economics

Upcoming Events

Date Country Release Last Forecast

10 Aug NZ Jul Electronic Card Transactions 0.4% 0.0%

Aus Jul NAB Business Survey 8

US Jul NFIB Small Business Optimism 89.0 85.0

Q2 Nonfarm Productivity 2.8% 0.0%

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 00.25% 00.25%

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%

Jul Corporate Goods Prices %yr 0.5% 0.0%