Intl FX 080718

UOB Economic-Treasury Research www.uobgroup.com/research Company Reg No. 193500026Z Friday, 18 July 2008 Global Markets News Highlights NY High 107.11 1.5894 2.0073 1.0259 0.9791 0.7716 1.0081 NY Low 105.11 1.5782 1.9949 1.0152 0.9678 0.7588 0.9979 ! Foreign Exchange Rates (as at 17 July 2008) JPY EUR GBP CHF AUD NZD CAD As at 18 Jul 106.39 1.5837 1.9960 1.0211 0.9724 0.7631 1.0048 Asian High Asian Low 105.51 104.76 1.5876 1.5825 2.0026 1.9975 1.0176 1.0134 0.9777 0.9750 0.7728 0.7707 1.0023 1.0005 Interest Rates USD Fed Funds Rate EUR Refinancing Rate GBP Repo Rate AUD Official Cash Rate NZD Official Cash Rate CAD Overnight Rate Current 2.00% 4.25% 5.00% 7.25% 8.25% 3.00% Next CB Meet 05 Aug 08 Aug 08 Aug 05 Aug 24 Jul 16 Jul UOB’s Forecast 2.00% 4.25% 5.00% 7.25% 8.25% 3.00% ! Crude oil plunged by more than $5/bbl on concerns over easing US demand after a government report on Wed showed that US oil product demand over the past 4 weeks was 2% lower from a year ago, as well as an easing in political tensions in the Iran nuclear situation. Nymex August crude traded between $129-136.75/bbl and ended lower by $5.31/bbl at $129.29/bbl, below the $130/bbl mark and the lowest since 6 Jun, having fallen $16 since Monday, the largest 3day fall in USD terms. Major US equity indices gained yesterday on the back of a sharp fall in oil and unexpectedly strong earnings reports during the session. JP Morgan Chase reported a profit in 2Q of $0.54/share, down from $1.20/share last year but way above consensus for a reading of $0.44/share. The better than expected results lent some optimism to the market amid continued worries about the extent of the credit crisis. The DJIA gained 207.38pts (1.85%) to 11,446.66, the S&P500 added 14.96pts (1.20%) to end at 1,260.32 and the Nasdaq Composite rose 27.45pts (1.20%) to end at 2,312.30. Equities moved lower in extended trading after the bell as Merrill Lynch, Google and Microsoft all reported disappointing results. Merrill Lynch reported Q2 losses of $4.66/share, way below estimates for a loss of $1.91/share. Both the DJ futures and the S&P futures were last trading down about 0.5%. Earnings reports due to day include Citigroup Inc, Honeywell as well as Schlumberger. The combination of the sharp fall in oil prices and the strong bid in equities drove the USD higher overnight against the other majors. USD/JPY touched a high of 107.11 exiting the NY-Ldn trade session at 106.28. EUR/USD also fell below the 1.58 level, touching a 1 week low of 1.5782, although the pair managed to settle at 1.5862 in the Ldn-NY session supported by inflation focused rhetoric from both Trichet who said that the ECB must stop 2nd round effects and will ensure that inflation is below 2% over the medium term; and Wellink who said that it was a mistake to think that inflation will fall if economy slows. Contrastingly, Cable strengthened, touching a high of 2.0073 as sentiment in the UK banking sector lifted. UK bank shares followed their US counterparts higher and news that Bradford and Bingley had won investor backing for a £400b rights issue eclipsed negative economic data. The commodity linked currencies fell. CAD, AUD and NZD Stock Indices (as at 17 July 2008) Dow Jones Industrial Average S&P 500 NASDAQ Composite Tokyo Nikkei 225 London FTSE 100 Frankfurt DAX All Ordinaries Closing 11446.66 1260.32 2312.30 12887.95 5286.30 6271.27 4977.40 % chg +1.85 +1.20 +1.20 +0.99 +2.63 +1.88 +0.60 Commodities (as at 17 July 2008) NYMEX Crude (August) Comex Gold (July) Reuters CRB Index Closing 129.29 970.00 432.60 % chg -3.95 +0.85 -2.69 ! Bond Yields (as at 17 July 2008) US 2-Year Bond US 10-Year Long Bond JP 10-Year JGB EU 10-Year Bund UK 10-Year Long Gilt Closing 2.49% 3.99% 1.60% 4.44% 4.90% Net chg +6 +5 +2 +5 -3 Key Events Date 18/07 Event BoJ to publish minutes of Jun 12-13 monetary policy meeting at 2350 GMT on Jul 17 ! Global Markets Friday, 18 July 2008 p2 all fell over 0.6%, weighed by lower oil prices as well as a broadly stronger USD. Weaker Chinese growth numbers also weighed on the AUD and NZD with the NZD/USD trading at a low of 0.7588 and the AUD/USD trading at a low of 0.9678 in the Ldn-NY session. Next week sees key data releases from both the antipodean economies with the RBNZ meeting on Thurs and the AU CPI on Wed. ! eroded safe haven demand for government debt. Both the 2yr and 10yr yields edged higher by about 6bps to end at 2.487% and 3.993% respectively. ! US treasury debt prices fell as equity gains during the session Gold prices ended a volatile session higher, despite heavy losses in crude and a pull back in risk aversion in the equity markets weighing on the metal in earlier trading. The prompt month Comex contract traded between $957.3-976.2/oz, settling up $8.20 to end at $970/0/oz. URL: www.uobgroup.com/ research Email: EcoTreasury.Research@UOBgroup.com Global Markets Friday, 18 July 2008 p3 Economic Indicators Local Time 17/07 0100 0930 2030 2030 2030 2030 18/07 0930 0930 1630 1630 1630 1630 1630 1700 Indicators US NAHB Housing Market Index AU Merchandise Imports US Housing Starts US Initial Jobless Claims US Building Permits US Continuing Claims Mth Jul Jun Jun Jul 13 Jun Jul 6 Actual 16 17.5 1066 366 1091 3122 UOB Forecast Mkt Forecast 18 960 380 965 3180k Previous 18 18.191bn 977k 348k 978k 3203k AU Export prices AU Import prices UK Public Finances (PSNCR) UK Public Sector Net Borrowing UK M4 Money Supply m/m UK M4 Money Supply y/y UK M4 Sterling Lending EU Euro-Zone Trade Balance sa Q2 Q2 Jun Jun Jun P Jun p Jun P May - 10.0 1.7 12.6 7.4 0.4 9.7 10.0 0.8 3.5% 2.7% 11.0bn 11.0bn 0.4% 10.0% 4.8bn 2.2bn Jimmy Koh (65) 6539 3545 Jimmy.KohCT@UOBgroup.com Thomas Lam (65) 6538 2169 Thomas.LamTL@UOBgroup.com Licia Kok (65) 6539 3549 Licia.KokHL@UOBgroup.com Disclaimer: This analysis is based on information available to the public. Although the information contained herein is believed to be reliable, UOB Group makes no representation as to the accuracy or completeness. Also, opinions and predictions contained herein reflect our opinion as of date of the analysis and are subject to change without notice. UOB Group may have positions in, and may effect transactions in, currencies and financial products mentioned herein. Prior to entering into any proposed transaction, without reliance upon UOB Group or its affiliates, the reader should determine, the economic risks and merits, as well as the legal, tax and accounting characterizations and consequences, of the transaction and that able to assume these risks. This document and its contents are proprietary information and products of UOB Group and may not be reproduced or otherwise. URL: www.uobgroup.com/ research Email: EcoTreasury.Research@UOBgroup.com