Foreign Exchange

London 08:00

FX Daily Strategist: Europe

EURUSD vs. 2yr EU-US yield
1.65 1.60 1.55 1.50 EURUSD 1.45 1.40 1.35 1.30 1.25 1.20 2yr Ger-US yield 1.15 1.10 Jul Nov Mar Jul Nov Mar Jul Nov Mar 08 09 10 11
- United States, Government Benchmarks, Bid, 2 Year, Yield, USD

2.25 2.00 1.75 1.50 1.25 1.00 0.75 0.50 0.25 0.00 -0.25 -0.50

Look for EURUSD to continue to progress ahead of ECB AUD gets no help from RBA but does it need any? Watch for further news on HIA2 we think unlikely, but certainly a USD-positive risk

After a predictably directionless US holiday session, the week begins in earnest today; and as we outlined yesterday, we are broadly speaking positive risk for the week. The approval of the next EUR 12bn tranche of aid should see the Greek debt crisis temporarily slip from cente stage; but clearly it will not stray too far from the wings. We view as overdone the reaction to yesterday's comments from S&P on the French proposal for private investor participation in the second bailout. Firstly, S&P said that the plan would result in selective default of just a few issues, and for what would likely be a short time only. Secondly, S&P is just one of four ratings agencies used by the Eurosystem and collateral eligibility is determined by the best credit rating. Lastly, and most importantly, we find it ludicrous to think that European politicians and the ECB would allow a few private ratings agencies to risk decades of political integration either the default rating will be averted or the rules on collateral will have to change. The German Constitutional Court hears arguments today in a case against the first Greek bailout; but a ruling is not expected for some weeks, if not months. When it comes, it is unlikely to rule that previous action was unconstitutional; more likely the Court will lay down the ground rules for any further bailouts. The EUR focus should therefore remain on Thursdays ECB meeting and the EURUSD-positive impact on diverging ECB and Fed policy we expect EURUSD to run higher as we approach the meeting. Today's RBA kept rates on hold and once again the statement failed to suggest any sense of urgency. There was perhaps some optimism that the Statement might be a little more hawkish; AUD fell and looks likely to struggle for the remainder of the day. But more broadly we question the need for further hikes as a precondition for a higher AUDUSD. At this stage the yield differential is clearly already attractive. Massive inflows of capital for long-term mining investment continue to argue for a continuation of the bull run; and while China is slowing down, there is as yet no suggestion of a hard landing. We see further upside for the AUDUSD over the coming weeks as risk rebounds after the Greek budget vote. The market is not long, suggesting plenty of ammunition to fuel a rally in the pair - and indeed in the AUD against GBP and JPY too. Markets this morning have jumped on a Bloomberg article on the topic of the Homeland Investment Act 2. As discussed in Friday's Weekly, we do not see another tax-holiday for US corporates as likely. The original rationale for HIA was discredited by an NBER study which found that most of the repatriated funds went to paying dividends or share buybacks rather than for investing in job creation. But we do not discount the plan entirely: there is potential for HIA2 to be included in the debt ceiling negotiations as a sweetener for Republicans. And while there is considerable uncertainty regarding the size and currency composition of profits held abroad by US corporates, a second HIA would undoubtedly be USD positive.

E U R /U S D

Source: Reuters Ecowin Pro. With Europeripheral stresses likely to move further from the centre of the market radar, factors driving relative ECB/Fed policy expectations can re-dominate EURUSD volatility; in which respect comments out the ECB meeting on Thursday should do EURUSD no harm.
GMT Country 07:30 SE (Jul) 08:00 EU (Jun) 08:00 EU (Jun) 08:28 GB (Jun) 10:00 EU (May) 10:00 EU (May) 14:00 US (May) Release Riksbank Rate Announcement % PMI Composite PMI Services CIPS Services Retail Sales % (sa m/m) Retail Sales % (ca y/y) Factory Orders % (m/m) Mkt 2.00 54.2 53.5 -1.0 -0.3 0.9 Last 1.75 57.8 56.0 53.8 0.9 1.1 -0.8

This is not classified as objective research. Please refer to important information at the end of the report.
http://www.globalmarkets.bnpparibas.com London: +44(0)20 7595 8086 NY: +1 212 841 2408 Sing.: +65 6210 3263/3347

P e rc e n t

MARKET: An initially quiet start following yesterday's non-event as a result of the US Independence Day holiday, turned to risk aversion on fears of an impending Chinese rate hike. Bank analysts are now predicting a June Chinese CPI of over 6%, with Moody's issuing a warning over the scale of problem loans at Chinese banks as regulators underestimate the banks exposures. EURUSD came off early highs above $1.4550 as real money accounts bought the dollar, with cable following suit down from $1.6100 and Dollar-yen punching up through Y81.00 on black box and CTA related buying. AUDUSD also felt the weight of the US unit ahead of the RBA rate decision, where rates remained on hold but. NZDUSD jumped in early trade to new multi decade highs of $0.8332, which preceded very strong Q2 business confidence data up 27% from Q1, but fell back later on general US dollar strength. Asian stocks also pared back earlier gains. (MNI) The Day Ahead (Via MNI) Europe data: This morning sees the release of the final services PMIs from the main European states all expected to confirm the preliminary releases, with France at 0648GMT (56.7), Germany at 0653GMT (58.3) and the EMU data at 0658GMT (54.2). At 0900GMT we have EMU retail trade data for May. At 0730GMT, the Riksbank announces the repo rate decision from the July 4 monetary policy meeting, and also delivers the Monetary Policy Update report. Talk circulating is of a 25bps hike from the Riksbank but also some accompanying hawkish talk. UK data focus remains on the Services PMI is out at 0828GMT on Tuesday, expected to show a slight decline to 53.5 in June from 53.8 before. At 0845GMT, ECB Governing Council member Christian Noyer takes part in a round table on G20 challenges at a Euro place conference, in Paris. At 1300GMT, the newly-installed IMF Managing Director Christine Lagarde arrives at the IMF headquarters in Washington. US data starts at 1330GMT with the weekly MNI Capital Goods Index, while at 1400GMT; US factory orders are expected to increase 1.0% in May on the already reported 1.9% increase in durable goods orders. That is then followed at 1430GMT by the weekly MNI Retail Trade Index.

official said. The comments came after S&P on Monday became the first agency to warn that a plan, pushed by France and endorsed by Germany, for banks to roll over their holdings of Greek debt into new bonds would constitute a selective default. (FT) Greece Opposition Leader calls austerity plan a 'failure', calls for lower tax rates, says Greece will continue to miss deficit goals, and the EU/IMF will have to change policies, in his first international interview with WSJ. Public Opposition To Cutbacks Is Mounting. (Reuters) Standard & Poors rating agency warned that a debt rollover plan for Greece would place the country in selective default. But the intervention caused only a mild reaction as the bullish undertow of recent sessions was curtailed but not fully displaced. (FT) Germany to Cut Borrowing in 2012. Germany's government plans to borrow less next year than previously expected, but will borrow more in the following years, according to a planning document for the 2012 budget. The news comes as government spokesman Steffen Seibert confirmed a report that Chancellor Angela Merkel and her coalition partners had finally reached an agreement to cut taxes and social-security contributions in January 2013. According to the document, the government plans to take on new net debts of 27.2 billion ($39.51 billion) in 2012, less than the 31.5 billion expected in March. For the current year, new net debt is likely to fall "below 30 billion," rather than 48.4 billion as previously planned, according to a senior finance ministry official. (WSJ) ECB's Nowotny: Banks Want To Stabilize Greece-problem is rating agencies, who are being stricter with Greece than South American countries, and suggestions that exporting countries leave the euro zone are nonsense. (Reuters) OECD's Gurria warns ECB against aggressive rate hikes, says commodity prices coming down, growth slowing, urges "flexible" monetary policy during fiscal tightening, raps "cacophony" and lack of policy coordination on Greece. (Reuters) China Service sector growth cooled in June after hitting a four-month high the previous month pick up in May, the latest results of the HSBC Services Purchasing Managers Index indicated. The bank said the seasonally adjusted Business Activity Index eased back to 54.1 last month from 54.3 in May and compares with April's 51.6. The reading was also below the long-term average of 57.2. Moody's Investors Service says that the potential scale of the problem loans at Chinese banks may be closer to its stress case than its base case, according to an assessment that the rating agency conducted following the release of new data by China's National Audit Office (NAO). When considering the apparent absence of a clear master plan to deal with this issue,

NEWS Europe ECB Will Continue to Accept Greek Debt. The European Central Bank will continue to accept Greek debt as collateral for loans unless all the major credit rating agencies it uses declare it to be in default, said a senior finance official. The ECB would rely on the principle of using the best rating available from the agencies Standard & Poors, Moodys and Fitch the Foreign Exchange Strategy Tuesday, 05 July 2011 http://www.GlobalMarkets.bnpparibas.com

Moody's also views the credit outlook for the Chinese banking system as potentially turning to negative. China c.bank says to stick to prudent monetary policy China will stick to current "prudent" monetary policy as inflationary pressures stay high, the People's Bank of China said in a statement after its quarterly monetary policy committee meeting on Monday. (Reuters) WTO to Hit China Over Export Limits. The WTO plans to condemn China for limiting its exports of major raw materials, rebuffing Beijing's arguments that curbs are necessary to protect the environment, according to trade diplomats and lawyers. (WSJ) UK Traders Raise Bets Against Sterling. Sterling, which last week tumbled to a 16-month low against the euro and a five-month trough versus the dollar, now looks the most attractive funding currency. Within the past two weeks, hedge funds and other currency traders have raised their bets against the pound to the highest in a year. (FT) Japan BoJ Governor Shirakawa: Global growth slowing but Japan economy to resume moderate recovery. BOJ upgrades assessment for 7 out of 9 regional economies, to cut Japan growth forecast. (Reuters) Bank of Japan policy board will consider upgrading the bank's economic overview at its two-day meeting starting next Monday in light of signs of recovery in exports and consumer spending, the Nikkei reports. Ten-yr JGB yield hit 2-mth high Japanese government bonds dipped on Tuesday, with the 10-year yield rising to a two-month high as market participants continued to make room on their books before a 10-year JGB auction. (Reuters) Japan's Reconstruction Minister Resigns Japan's reconstruction minister announced his resignation Tuesday after a week on the job, following controversial remarks to leaders in the area devastated by the March 11 earthquake and tsunami and creating the latest headache for struggling Prime Minister Naoto Kan.(WSJ) Japan cabinet approves $25 bln extra budget for disaster relief Japan's government approved a $25 billion extra budget on Tuesday for disaster relief after the March 11 earthquake that will not require new bond issuance, though bigger spending later this year is likely to strain stretched public finances. (Reuters) Japan's government may be unable to smoothly carry out spending from the current fiscal year's budget from September unless parliament passes a bill allowing the issuance of deficit-covering bonds, Finance Minister Yoshihiko Noda said on Tuesday. (Reuters) US

Deficit Talks Focus on Taxes. Democrats have floated ideas that could raise tax revenues by some $400 billion over the next decade as they negotiate deficit reductions with Republicans, posing the most contentious issue as talks reach a critical stage this week. Republican leaders say they want no tax increases in the deal, though some say they can accept ideas for generating additional revenue along with broader tax changes. Democrats say significant tax increases are required for fairness, to offset the deep cuts to government services that will make up the bulk of deficit reduction. One key question is what kinds of revenue measures Republicans might accept. A second is whether they will approve steps that raise the overall amount of tax revenue the government collects, or insist that new revenue additions be offset by tax cuts elsewhere. (WSJ) Australia/ New Zealand/ Canada Australia leaves key interest rate at 4.75%. The RBA its benchmark interest rate unchanged today for a seventh straight meeting as signs of slower growth from Europe to China dimmed prospects for an acceleration in hiring at home. Governor Glenn Stevens held the overnight cash rate target at 4.75 percent in Sydney. Growth this year is unlikely to be as strong as earlier forecast, Stevens said in todays statement. (Bloomberg) Australian services sector contracted for the second straight month in June, with the Australia Industry Group/Commonwealth Bank Performance of Services Index falling 1.4 points to 48.5, after dropping 1.6 points in May. The index has now been in negative territory for 10 of the past 12 months but a bright spot was rise in new orders sub-index which entered the expansion zone for the first time since October 2010. Trade balance +A$2.33 bln in May vs +A$1.6 bln in April. Market consensus was for surplus of A$1.9 bln. New Zealand business confidence rebounded in Q2. New Zealand business confidence rose in the second quarter as record-low interest rates and soaring commodity prices bolstered a recovery after the deadliest earthquake in 80 years devastated Christchurch city in February. A net 27 percent of 782 companies surveyed expect the economy will improve over the next six months, from a net 27 percent that saw a deterioration in the previous survey, the New Zealand Institute of Economic Research said today in Wellington The net figure, which isnt adjusted for seasonal patterns, is calculated by subtracting the proportion of pessimists from optimists. (Bloomberg) Other Asia: S. Koreas financial regulator said it will assess the financial conditions of local savings banks to determine whether to pump public funds into viable players in an effort to prop up the ailing sector, Yonhap News reported. South Korea has been grappling with salvaging the troubled sector as savings banks have been suffering from deteriorating asset quality due to soured construction loans. The delinquency rate of propertylinked loans stood at 20.4% as of the end of March, up from 18% late last year.

Foreign Exchange Strategy Tuesday, 05 July 2011 http://www.GlobalMarkets.bnpparibas.com

Malaysias King Tries to Ease Growing Political Rift. Malaysia's king has made an unusual foray into the country's volatile political field by urging pro-democracy activists and political leaders to settle their differences ahead of a major protest rally planned for later this week. It was unclear whether the gesture would be enough to ease mounting tensions ahead of possible early elections. The protesters Monday said they are reassessing whether to hold their July 9 march, organized to publicize demands for equal media coverage for all election candidates and for other electoral reforms, such as halting the past practice of people voting multiple times. (WSJ) Malaysia's exports climbed 5.4% YoY in May after rising 11.1% in April, much lower than market expectations of 11.0%. Imports rose 5.6% YoY in May, decelerating from a 9.4% gain in April. The forecasts are for a 8.6% gain. On the month on month basis, imports and exports declined 0.4% and 4.7% in May respectively. Trade surplus shrank to MYR 8.49bn in May from MYR 11.01bn in April vs. consensus of MYR 10.50bn. (Bloomberg) Thailand's Yingluck announces five-party coalition Thailand's Yingluck Shinawatra on Monday announced the formation of a five-party coalition led by her Puea Thai Party, a day after her stunning election victory, which will control about 60 percent of parliament. (Reuters) Bank of Thailand: Monitoring New Government Policies to Estimate Impact On Economy The Bank of Thailand is monitoring the incoming government's policies to estimate impact on the country's economy, Senior Director Mathee Supapongse said Monday. (Thailand's CPI rose 4.06% in June from a year earlier, slower than May's 4.19% increase.) (DJ)

Vietnam Central Bank Cuts 7-Day Reverse Repo Rate To 14% From 15% Monday The State Bank of Vietnam has cut its seven-day reverse repo rate to 14% from 15%, effective Monday, a central bank official said Monday. Vietnamese banks' high dong interest rates are expected to cool slightly due to improved liquidity following CB action. Philippines CPI rose 4.6% yoy in June, slightly lower than forecasts of 4.7%, using 2000 as a base year, the fastest pace since April 2009. Using 2006 as a base year, CPI rose 5.2% yoy from 5.0% in May. CPI is nudging closer to the top end of the BSP's target range of 3-5%. Worrisome was the jump in core inflation to 4.0% yoy in June, up from 3.7% in May. The Philippine central bank will keep its 2011 inflation target of 3-5 percent despite the rebasing of inflation data to 2006 prices from the previous base year of 2000, Governor Amando Tetangco said on Tuesday. (Reuters)

Foreign Exchange Strategy Tuesday, 05 July 2011 http://www.GlobalMarkets.bnpparibas.com

SEK Recovery Can Continue

The SEK decline over the past month seems more related to concerns over liquidity tightening and these concerns were largely put to rest following the successful Greek vote last week. The SEKs status as a fiscal safe haven should spur a recovery, with an expected Riksbank hike today to help further. We like CHFSEK lower. The Riksbank meets today and our economists expect a 25bps rate hike to 2.00% with the Central Bank expected to stick with its more hawkish interpretation of the labour market. Our economists reckon that despite some caution on the external environment displayed in the statement, the rate profile will remain consistent with rates ending at 2.50% by the year end. This rate advantage should bode well for the SEK- which until very recently was a notable underperformer; note that the SEK has lost 2.15% against the USD over the past month, the steepest decline of all G10 currencies. What drove this underperformance last month? In addition to the tail risk of a sharp manufacturing slowdown, fears of a liquidity crisis have likely hurt the SEK in a big way. It is well known that Swedish banks though well capitalised and with minimal exposure to GIPS rely on funding in other currencies. However, with the passing of the Greek vote on austerity measures and implementation, we have averted such a tail risk of a funding crisis. Even ahead of the Greek vote, we had continued signs of central bankers taking pre-emptive measures against the potential for a default-led liquidity crisis with the Feds extension of USD swap line agreements by a year- which were originally due to expire on August 1st. We point out that this is a contingency measure, not directly contributing to USD liquidity. However, that may not prevent the markets from believing that it wont and since the measure was announced, there has been an easing of tensions in EURUSD cross currency basis swaps (swapping of EUR LIBOR for USD LIBOR) of late and a strong rebound in the SEK (Chart 1 compares the EUR 1Y basis swap with USDSEK cross). We had previously laid out some reasons for our constructive SEK view (See EURSEK Lower Barring Liquidity Stress, 12 May). As the title suggests, the SEKs performance over the past two years appears to be strongly explained by its status as a fiscal safe haven, with an ongoing focus on the medium-to-longer term sovereign debt concerns in Europe. Chart 2 shows that the spread of Sweden 5Y CDS over its German counterpart has led EURSEK by about a month. In other words, the SEK is being judged relative to one of the soundest sovereigns in Europe. It suggests that EURSEK looks a little over the top and should at least be closer to 9.00. In terms of risk factors to our constructive SEK view, we have to acknowledge that the currency of Sweden, being a small and open economy exposed to the global IP cycle, could be vulnerable in the context of globally falling PMIs. However, just as Japanese data (recent IP) have rebounded from supply shortages following the 11 March disaster- with these being mirrored in stronger PMIs in the US too; it plays to our economists view that Foreign Exchange Strategy Tuesday, 05 July 2011 http://www.GlobalMarkets.bnpparibas.com

Chart 1: USDSEK vs. Cross-Ccy Swap

Source: Bloomberg, BNP Paribas.

Chart 2: SEK-DEM CDS Leading EURSEK

Source: Bloomberg, BNP Paribas. much of what we are seeing could be temporary. This in turn implies that a reversal in the other factor hurting the SEK i.e. fears of liquidity shortage could see the SEK recover as the fiscal safe-haven driver comes back as a dominant driver of the currency. STRATEGY: We suggested a short CHFSEK position (spot now 7.39) as our trade of the week and levels below 7.20 can be seen going forward. So far we have seen only a limited unwind of CHF longs but if as we expect euro-peripheral stress moves further away from the centre of the market radar in coming days and weeks, we expect the unwind to extend.

Daily Currency Summary

G3
We see the reaction to S&Ps comments yesterday as overdone; and see little threat from todays German Constitutional Court hearing which is not expected to rule for some weeks at the earliest. Thus focus should quickly turn to the ECB. There is little doubt that a rate hike will be delivered, but the question is what signals will be sent about subsequent moves. Our view is that the ECB will deliver more hikes and at a faster pace than is currently priced in. Investors are not long EUR; we expect dips to be shallow and look for further gains in the week ahead. Leveraged money has done no more than cover shorts in the wake of the passage of the Greek austerity measure and if EURUSD establishes a hold above 1.45 many may start to play upside risks. Despite its reputation as a fear gauge, the Yen remains oblivious to the panic and euphoria of recent weeks. Indeed, it now seems to be able to shake off even significant movements in US Treasuries. Ultimately this has to change, but there is little to suggest that must be soon; implied volatility has to fall a lot further before complacency can be said to have set in. Meanwhile, the threat of a more significant rating agency move continues to grow while politicians fiddle. While USDJPY flat-lines, EURJPY mimics EURUSD and must continue to until and unless USDJPY can establish some serious independent momentum. Given our preference for EURUSD to push higher this means Y118 next stop for EURJPY. Ongoing safe haven unwinds will for now see CHFJPY fall further, while Toshin demand, and a reinstatement of retail positions on a decent Australian employment report this week should see AUDJPY push on.

EURUSD

USDJPY

JPY Crosses

EUR Bloc
UK construction PMI came in softer than expected, following on from last weeks ghastly manufacturing PMI. The latter showed broad based weakness; lowest manufacturing PMI since Sept 2009, slowest input price inflation since Dec 2009, slowest growth in new export orders since Sept 2010, lowest employment growth since Sept 2010. Against this backdrop, EURGBP finds it easy to progress north. BNPP economics do not see todays PMI Services offering Sterling any support. The unwind of the CHF safe haven trade was very much in evidence Thursday and with the EcoFin approving the next 12bn tranche of aid over the weekend, we see scope for EURCHF to extend gains well beyond the three big figures seen so far. The same goes for various CHF crosses vs. risk/commodity currencies, including an extension of the downside on CHFSEK (now targeting 7.20). Swiss Manufacturing PMI came in softer; 53.40 in June (57.80 tipped) down from 59.20 in May. This should underscore the likelihood of the SNB lagging the ECB, adding to the support under EURCHF. The NOK should continue to recover strongly as a fiscal safe haven and to the extent it had been dogged by liquidity tensions in the weeks leading up to the Greek vote. NOKSEK could consolidate in a 1.1650-1.1750 range near term though we would expect the cross to remain biased higher rather than lower on a medium term view. SEK is the top performing currency in G10 as liquidity tensions abated with the Greek vote on austerity measures having averted a Greek default and hence a potential pan-European liquidity funding crisis. This has been reflected in the likes of cross-cc basis swaps and should see the USDSEK slide maintain traction. The Riksbank is expected to hike to 2.00% today but focus will be on the post-meeting comments.

EURGBP

EURCHF

EURNOK

EURSEK

USD Bloc
Stronger domestic CPI, along with some support from the rebound in oil prices and buoyant equities, has helped the CAD, USDCAD breaking sharply lower. With 0.9600 now having been taken out, there is nothing to say we wont continue to head south to test 0.9500 is long as the broader USD trend fails to reverse. The week ahead brings June Ivey PMI and employment, former expected to moderate though the stronger US ISM may have reduced that risk. CAD should continue to remain supported. The RBA kept rates on hold and once again the statement failed to suggest any sense of urgency. AUD fell and looks likely to struggle short-term. But more broadly we question the need for further hikes as a precondition for a higher AUDUSD. The yield differential is clearly already attractive; massive inflows of capital for long-term mining investment continue to argue for a continuation of the bull run; and while China is slowing down, there is as yet no suggestion of a hard landing. We think the market is not long, and as risk rebounds, there is likely still some upside in the pair. The Kiwi continues to mark all-time highs against the USD, likely aided by reserve manager inflows and insurance payments related to the earthquakes. The NZIER survey showed a sharp rebound this morning; and expectations of a strong Q1 GDP later in the week should continue to support.

USDCAD

AUDUSD

NZDUSD

Foreign Exchange Strategy Tuesday, 05 July 2011 http://www.GlobalMarkets.bnpparibas.com

FX Forecasts*
USD Bloc EUR/USD USD/JPY USD/CHF GBP/USD USD/CAD AUD/USD NZD/USD USD/SEK USD/NOK EUR Bloc EUR/JPY EUR/GBP EUR/CHF EUR/SEK EUR/NOK EUR/DKK Central Europe USD/PLN EUR/CZK EUR/HUF USD/ZAR USD/TRY EUR/RON USD/RUB EUR/PLN USD/UAH EUR/RSD Asia Bloc USD/SGD USD/MYR USD/IDR USD/THB USD/PHP USD/HKD USD/RMB USD/TWD USD/KRW USD/INR USD/VND LATAM Bloc USD/ARS USD/BRL USD/CLP USD/MXN USD/COP USD/VEF USD/PEN Others USD Index *End Quarter Q3 '11 1.50 78 0.83 1.65 0.98 1.09 0.82 5.93 4.98 Q3 '11 117 0.91 1.25 8.90 7.47 7.46 Q3 '11 2.60 24.3 275 6.80 1.52 4.20 27.51 3.90 7.8 100 Q3 '11 1.22 2.95 8500 29.80 42.50 7.80 6.40 28.00 1060 45.50 20500 Q3 '11 4.18 1.58 450 11.40 1730 4.29 2.70 Q3 '11 72.30 Q4 '11 1.55 83 0.83 1.68 0.93 1.13 0.84 5.48 4.77 Q4 '11 129 0.92 1.28 8.50 7.40 7.46 Q4 '11 2.48 24.5 275 6.60 1.50 4.15 27.25 3.85 7.8 100 Q4 '11 1.21 2.90 8400 29.50 42.00 7.80 6.31 27.50 1050 45.00 20000 Q4 '11 4.25 1.55 435 11.10 1690 4.29 2.65 Q4 '11 70.76 Q1 '12 1.45 85 0.90 1.59 0.95 1.07 0.81 5.93 5.07 Q1 '12 123 0.91 1.30 8.60 7.35 7.46 Q1 '12 2.69 24.1 269 6.55 1.56 4.20 27.86 3.90 7.5 98 Q1 '12 1.21 2.87 8300 29.30 41.50 7.80 6.25 27.00 1040 44.50 20000 Q1 '12 4.34 1.53 425 11.00 1690 4.29 2.63 Q1 '12 74.87 Q2 '12 1.40 90 0.93 1.56 0.97 1.04 0.80 6.21 5.26 Q2 '12 126 0.90 1.30 8.70 7.37 7.46 Q2 '12 2.75 23.9 265 6.60 1.59 4.25 27.97 3.85 7.5 97 Q2 '12 1.20 2.85 8200 29.00 41.00 7.80 6.21 26.70 1030 44.00 20000 Q2 '12 4.43 1.55 430 10.90 1700 4.29 2.63 Q2 '12 77.62 Q3 '12 1.35 95 1.00 1.53 1.01 0.99 0.76 6.67 5.56 Q3 '12 128 0.88 1.35 9.00 7.50 7.46 Q3 '12 2.81 23.8 265 6.50 1.63 4.15 28.08 3.80 7.5 96 Q3 '12 1.19 2.83 8100 28.70 40.50 7.80 6.17 26.50 1020 43.50 20000 Q3 '12 4.51 1.56 435 11.00 1710 4.29 2.64 Q3 '12 80.72 Q4 '12 1.35 95 1.00 1.53 1.01 0.99 0.76 6.67 5.56 Q4 '12 128 0.88 1.35 9.00 7.50 7.46 Q4 '12 2.78 23.5 260 6.50 1.65 4.10 27.65 3.75 7.5 95 Q4 '12 1.18 2.80 8000 28.50 40.00 7.80 6.13 26.00 1010 43.00 20000 Q4 '12 4.60 1.58 440 11.10 1720 4.29 2.66 Q4 '12 80.72 Q1 '13 1.30 95 1.04 1.53 1.04 0.96 0.74 6.92 5.77 Q1 '13 124 0.85 1.35 9.00 7.50 7.46 Q1 '13 2.85 23.7 260 7.20 1.65 4.20 28.19 3.70 7.5 93 Q1 '13 1.17 2.77 7900 28.30 39.50 7.80 6.23 26.00 1000 43.00 20000 Q1 '13 4.69 1.59 442 11.10 1725 8.80 2.67 Q1 '13 82.99 Q2 '13 1.30 95 1.04 1.53 1.04 0.96 0.74 6.92 5.77 Q2 '13 124 0.85 1.35 9.00 7.50 7.46 Q2 '13 2.77 24.0 255 7.10 1.67 4.20 27.75 3.60 7.5 92 Q2 '13 1.16 2.75 7800 28.00 39.00 7.80 6.20 26.00 1000 42.50 20000 Q2 '13 4.78 1.60 445 11.17 1730 8.80 2.68 Q2 '13 82.99 Q3 '13 1.30 95 1.04 1.53 1.04 0.96 0.74 6.92 5.77 Q3 '13 124 0.85 1.35 9.00 7.50 7.46 Q3 '13 2.85 23.5 260 7.00 1.69 4.10 29.07 3.70 7.5 91 Q3 '13 1.15 2.73 7800 28.00 39.00 7.80 6.17 26.00 1000 42.50 20000 Q3 '13 4.86 1.61 447 11.25 1740 8.80 2.69 Q3 '13 82.99 Q4 '13 1.30 95 1.04 1.53 1.04 0.96 0.74 6.92 5.77 Q4 '13 124 0.85 1.35 9.00 7.50 7.46 Q4 '13 2.85 23.3 260 6.90 1.69 3.95 27.75 3.70 7.3 90 Q4 '13 1.14 2.70 7800 28.00 39.00 7.80 6.15 26.00 1000 42.00 20000 Q4 '13 4.95 1.62 450 11.30 1750 8.80 2.70 Q4 '13 82.99 Q1 '14 1.34 114 1.09 1.70 1.21 0.78 0.56 6.94 5.07 Q1 '14 153 0.79 1.46 9.30 6.80 7.46 Q1 '14 2.65 23.1 250 6.69 1.54 3.90 27.75 3.55 7.4 85 Q1 '14 --------------------------------------------Q1 '14 ----------------------------Q1 '14 83.88

Foreign Exchange Strategy Tuesday, 05 July 2011 http://www.GlobalMarkets.bnpparibas.com

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Foreign Exchange
Ray Attrill James Hellawell Kiran Kowshik Mary Nicola Drew Brick Chin Loo Thio Robert Ryan Jasmine Poh Gao Qi Bartosz Pawlowski Diego Donadio Senior Currency Strategist Quantitative Strategist Currency Strategist Currency Strategist Head of FX & IR Strategy Asia FX & IR Asia Strategist FX & IR Asia Strategist FX & IR Asia Strategist FX & IR Asia Strategist Head of FX & IR Strategy CEEMEA FX & IR Latin America Strategist New York London London New York 1 212 841 2492 44 20 7595 8485 44 20 7595 1495 1 212 841 2492 raymond.attrill@americas.bnpparibas.com james.hellawell@uk.bnpparibas.com kiran.kowshik@bnpparibas.com mary.nicola@americas.bnpparibas.com drew.brick@asia.bnpparibas.com chin.thio@asia.bnpparibas.com robert.ryan@asia.bnpparibas.com jasmine.j.poh@asia.bnpparibas.com gao.qi@asia.bnpparibas.com bartosz.pawlowski@uk.bnpparibas.com diego.donadio@@br.bnpparibas.com

Emerging Markets FX & IR Strategy

Singapore 65 6210 3262 Singapore 65 6210 3263 Singapore 65 6210 3314 Singapore 65 6210 3418 Shanghai 86 21 2896 2876 London 44 20 7595 8195 So Paulo 55 11 3841 3421

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BNP Paribas (2011). All rights reserved.

Foreign Exchange Strategy Tuesday, 05 July 2011 http://www.GlobalMarkets.bnpparibas.com