Westpac suggest that "global risks appear.....>

FOREX: Westpac suggest that "global risks appear to be mispriced. An already

challenging narrative risk appetite continues to build. Over the last week

global trade tensions have intensified dramatically, a more "assertive" Fed has

emerged, Eurozone political uncertainty has intensified & China activity data

for May was on the weaker side. Yet "risk premia" remain mostly subdued."

- "A strong patch of US data in Q2 & a relatively more hawkish Fed have placed

renewed focus on US divergence, providing ample fuel for the USD. However, the

perception of US outperformance may be approaching a local peak, as the diff.

between US & global data surprise indices is at unsustainable highs."

- Westpac believe that the "CAD the most undervalued dollar bloc currency. AUD,

NZD and CAD have all been trading weaker than high frequency measures of their

terms of trade would dictate. However, CAD offers the most compelling value from

a commodity valuation standpoint. Energy prices have eased about 10% from their

highs but even so CAD has materially undershot this year's run-up in crude oil.

NAFTA disruption risk is the obvious CAD headwind but against that the BoC is

much closer to lifting rates than either the RBA or the RBNZ."