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; ECB to help We stay long EURCHF and short CHFSEK AUD may benefit from both RBA and June employment

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 Release 09:00 EU (May) PPI % (m/m) 09:00 EU (May) PPI % (y/y) Mkt -0.1 6.4 Last 0.9 6.7

Fridays upside surprise on ISM and the accompanying downside surprise on prices paid was a perfect combination for equity market sentiment, but coming just before the holiday weekend, the lack of participation failed to produce an extension of the mid-week EURUSD rally. For today, with the US out, and with little data of importance, markets may struggle to find direction. But for the rest of the week that direction should be in favour of risk. After the Eurogroup over the weekend approved the next EUR 12bn tranche of aid, the Greek debt crisis should be temporarily relegated to the inside pages; and the chances of a risk-off event on the margins of the US debt ceiling negotiations also seems to be receding: if necessary, both parties seem to be willing to consider a 'mini-extension' of the debt limit that would stave off any shocks around the current August 2 deadline. Thursdays ECB meeting now looms large. The easing of Euro peripheral stress should allow markets to re-price further policy moves from the central bank. While global reserve managers may have been less active euro buyers than we had supposed (through Q1 at least) we expect to see real money investors add to long euro exposure in the week ahead and for leveraged accounts to start participating on euro upside if and as it become clear dips arent running much below 1.4500. In AUDUSD, just as Fridays dip after the Chinese PMI proved shallow, similarly the dip after today's disappointing retail sales was met with solid bids. Given the easing in euro-peripheral tensions, it would not surprise to hear the RBA sounding a little less neutral tomorrow than it did last month. But does the AUD need more rate hikes to continue climbing? Expectations of further hikes are low anyway - only 3bp or so over the next 12 months and 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's no suggestion of a hard landing. The RBA is likely to stick with the message that a rate hike is coming but that there's no hurry. In the meantime, AUDUSD continues to climb but it seems the market is not long, suggesting there may be still considerable upside yet in the pair and indeed in the AUD against GBP and JPY too. Australian employment data on Thursday will also be important here. We are torn between short CHFSEK and long EURCHF as our favourite trade this week, believing both have potential to extend last weeks moves by another 2% or so. So far we have seen only a limited unwind, 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. The significant fall in the Swiss PMI on Friday strengthens our perception that the SNB will seriously lag the ECB in policy normalization, and this in itself plays to further EURCHF upside. The Riksbank meanwhile should proceed to lift its repo rate by 25bp to 2% on Tuesday and though largely expected, it should help maintain upward momentum in all things SEK. Ahead of Fridays non-farm payrolls, where expectations are already subdued (circa 80k), other key events include the various services PMIs, German factory and Japan machinery orders and Canadian employment. If this last is healthy, then, having taken out 0.9600 on Friday, USDCAD could test 0.95 on the week.
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E U R /U S D

This is not classified as objective research. Please refer to important information at the end of the report.
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P e rc e n t

Market: Thin market conditions greeted the start of the new week with the US Independence day holiday. EURUSD opened on a bid footing following weekend news that the EU finance ministers had approved the Euro 12 bln payment tranche for Greece and the strong Wall Street close of Friday. The single currency moved higher from opening levels of $1.4525 through stops at 1.4555 to $1.4578 before profit taking send the pair back to $1.4533 only to be bolstered again by Asian sovereign demand to $1.4567.However, reported comments from S&P, saying the Greek debt rollover plan may put Greece in a selective default has seen the euro trade to a session low at $1.4525. Pair last at $1.4530. As per WCRS, most G10 up to 0.30% higher (led by SEK) with only AUD (-0.25%) and CAD (-0.14%). Asian equities in strong rally mode, with Chinese bourses +1.50% plus, with all bourses in the green. On Friday, US equities all extend opening gains on ISM report, NASDAQ fares best +_1,53% with S&P500 +1.44% and DJIA +1.36%. Data/Event for today (courtesy MNI) The July 4 week in the US is shortened by the holiday on Monday so there is no US data today and overall for the week, the data calendar is light, and most of the focus in markets will remain on the upcoming employment report on Friday. Bank of Japan quarterly regional economic report is still due from Japan, at 0530GMT, while at 0615GMT, Bank of Japan Osaka branch manager Hideo Hayakawa gives a news conference. UK data at 0830GMT includes Bank of England Housing Equity Withdrawal data as well as PMI Construction. European data: Germany June car registrations data is due from Europe today, although scheduled data starts at 0900GMT with EMU PPI data for May. In Switzerland today, Swiss National Bank President Philipp Hildebrand is due to speak at the OMFIF, in Edinburgh.

International Monetary Fund before 12 billion ($17.4 billion) is handed over to Athens. The payment is expected by July 15. The IMF said it welcomed the "euro group's commitment to a financing strategy" for Greece. Ministers also decided they would agree by September on arrangements for a new bailout to supplement the 110 billion package they agreed on last year but which fell short mainly because Greece is unable to raise money in financial markets as had been expected. (WSJ) Germanys Schaeuable: Hard work in Greece must go on. German Finance Minister Wolfgang Schaeuble said on Saturday -- after the approval of the release of a tranche of loans to Greece -- that efforts to meet demands for the next tranche in the autumn must continue unabated. Schaeuble said, after a conference call among the 17 euro zone finance ministers, the release was made possible by the Greek parliament passing austerity and reform laws on Wednesday and Thursday, removing the threat of a near-term debt default. German Fin Min said new Greek aid package can be approved by fall. (Reuters) Roaming data costs in Europe to fall. The average cost of using smartphones and tablets when travelling in the European Union will be more than halved under new plans from Brussels that will delight customers but deliver a big blow to mobile operators. (FT) Collateral demand rises for interbank lending. Interbank lending using European government bonds as collateral has reached record levels, in spite of worries over Greek debt default and the future of the eurozone. By contrast, lending between banks without the backing of collateral has ground to a near standstill for any loans of more than a weeks duration, as fears of bank insolvency rise due to continuing uncertainty over Greece and its emergency loan payments. (FT) France split over Strauss-Kahn return. French ambivalence over the prospect of Dominque StraussKahns return to domestic politics was underscored by a new opinion poll which showed the country broadly divided on a presidential bid by the former International Monetary Fund chief. Speculation that Mr Strauss-Kahn could put himself forward for the opposition Socialist party nomination for the 2012 presidential race has mounted since doubts surfaced over allegations that he assaulted a New York chambermaid, leading to his release from house arrest in New York last week. (FT) Euro poised to gain but Greece is the wild card. The euro is poised to rise further as investors reload on riskier bets, but their enthusiasm could be curbed by the chance of Greece's crisis reigniting. So long as European leaders prevent Greece from defaulting, something most

NEWS Europe Greece awaits further rescue. Euro-zone finance ministers signed off on a new slice of bailout money for Greece, avoiding a financial meltdown this month, but left themselves with a heavy task ahead to work out details for a new rescue package for the country. The ministers' agreement in a teleconference call on Saturday evening leaves only the expected approval of the board of the Foreign Exchange Strategy Monday, 04 July 2011 http://www.GlobalMarkets.bnpparibas.com

observers expect in the short term, traders will shift their attention to worries about the global economy. Strongerthan-expected readings in coming days could encourage investors to buy the higher-risk euro and currencies tied to growth. (WSJ) Eurogroup chairman Jean-Claude Juncker: Greek sovereignty "will be massively limited, "no danger" for Spain, Italy and Belgium of fallout from the Greek crisis and Ireland and Portugal "on the way back to capital markets". (Reuters) Ex-Euro-zone Leaders Support EU New Deal Plan, to issue its own bonds and implement a "New Deal" economic stimulus program similar to the one undertaken in the U.S. in response to the Great Depression. Former government leaders Guy Verhofstadt of Belgium, Giuliano Amato of Italy, Michel Rocard of France and Portugal's Jorge Sampaio support a plan which would use European Union-backed bonds to finance economic growth. Cash raised by issuing bonds could be used for projects further supported by the European Investment Bank. Proceeds generated from the investments would be used to service the interest on the bonds, according to the Spiegel report. (Reuters) The Greek economy should shrink by 3.9 percent this year, slightly more than previously forecast, before returning to growth in 2012, Greece's new Finance Minister Evangelos Venizelos told Reuters on Friday. (Reuters) China China growth target difficult to achieve. Chinas economic growth target for this year is difficult to achieve, Vice Premier Wang Qishan said in a statement on the governments website today. Its hard to manage to balance the economy and inflation given the complications and uncertainty in the global situation, Wang said. He made the comments in a conference in Hebei province early this month, the statement said. (Bloomberg) Chinas services slowdown adds to concern growth is slumping. July 4 (Bloomberg) -- Chinas nonmanufacturing industries expanded at the slowest pace in four months in June, adding to concerns that efforts to tame inflation are curbing growth in the worlds secondbiggest economy. A purchasing managers index dropped to 57 from 61.9 in May, the China Federation of Logistics and Purchasing said on its website yesterday. A reading above 50 indicates an expansion. (Bloomberg)

Sunday that it will work to improve operation and management of foreign exchange reserve to maintain financial security. It will also promote reform of foreign exchange regime to facilitate trade and investment, the SAFE said in a statement on its website. Further, it will steadily push forward renminbi capital account convertibility and strengthen monitoring and warning on international balance of payment to prevent unusual cross-border capital flows. (ChinaDaily) China housing cost to fall and no hard landing expected. The nation's high housing prices will meet a downward inflection point in the third quarter of the year but the sector is not expected to suffer a "hard landing", according to a report released on Saturday by the Beijing-based Renmin University of China. More Chinese cities saw lower price growth for commercial homes during the first six months of the year amid strict measures aimed at tightening the property market and lowering housing prices, noted a report by the Institute of Economic Research at Renmin University of China. (ChinaDaily) Chinese Fund Interested in Chilean Mining and Energy Investments. China Investment Corporation (CIC), which manages about $300 billion, is interested in investing in Chiles mining, ports, infrastructure and energy industries, Chiles government said. Chiles Economy Minister Juan Andres Fontaine met with CIC representatives today, according to a ministerial statement distributed by e-mail. (Bloomberg) Bad loan risk triggers surge in China default-swap costs. Credit markets are signaling growing concerns that bad loans in China will force the government to bail out banks owed more than 10 trillion yuan ($1.5 trillion) by local authorities. Policy makers efforts to restrict lending and curb inflation in the aftermath of a $2.7 trillion two-year credit boom are threatening to slow the economy and trigger defaults. As much as 30 percent of loans to local government entities may sour and are likely to be the biggest source of non-performing assets for the industry, Standard & Poors said in April. (Bloomberg) China GDP will grow 9.6% in 2011. Chinas gross domestic product will grow 9.6 percent in 2011 and the consumer price index will be at 4.7 percent, said Wang Jinbin, professor at the School of Economics at Renmin University of China, according to the official Xinhua News Agency. (Bloomberg) China strikes again at off-balance-sheet loans China's bank regulator has ordered banks to check all their deals in discounted commercial bills in a move to cut banks' off-balance-sheet lending after discovering misconduct among some banks. (Reuters)

China vows to improve forex management. China's State Administration of Foreign Exchange (SAFE) said Foreign Exchange Strategy Monday, 04 July 2011 http://www.GlobalMarkets.bnpparibas.com

Doubts are mounting about the health of China's property market, Beijing's ability to control inflation and the true extent of government debt. Last week, the central government disclosed that local governments owed debts equal to a quarter of gross domestic product. It's hard to imagine a large chunk of those borrowings won't turn sour. (WSJ) Hong Kongers March for Elections, Cheaper Housing Thousands marched in Hong Kong on the 14th anniversary of the territory's handover to protest a wide range of issues, among them a controversial by-election bill and soaring property prices. (WSJ) Japan Ties and tensions between China and Japan Japanese Foreign Minister Takeaki Matsumoto is visiting China for talks about the intense but often icy ties between Asia's top two economies, which face persistent friction over sea disputes and historical distrust. (Reuters) Bank of Japan Governor Masaaki Shirakawa said on Monday that the global economy continues to recover albeit at a slower pace. "Japan's economy remains under downward pressure mainly on output but is showing signs of picking up," he said in a speech to a quarterly meeting of branch managers. (Reuters) The Bank of Japan is likely to upgrade its view of output and the economy this month, encouraged by progress in restoring supply chains and expected improvement in business sentiment in months ahead, sources said, but continue to strike a note of caution about signs of a global economic slowdown. The BOJ will therefore consider changing the language of its economic assessment compared with last month, when it said the economy appeared to be picking up but remained under downward pressure mainly on output. The central bank is expected to hold off on easing monetary policy at its rate review on July 11-12 unless the Greek debt crisis triggers financial market turmoil severe enough to threaten Japan's outlook for a moderate recovery. (Reuters) June monetary base rise 17.0% YoY. Japan's monetary base rose 17.0 percent in June from a year earlier, having increased sharply after the central bank flooded markets with extra cash to calm markets after the March natural disaster. (Reuters) Australia/ New Zealand/Canada Australia TD securities inflation slid to 2.9% YoY last month from 3.3% YoY the previous month. On the month, it slid to 0.0% in June from 0.2% in May. (Bloomberg) Foreign Exchange Strategy Monday, 04 July 2011 http://www.GlobalMarkets.bnpparibas.com

Australian home-building approvals fell in May on Apartments. Australian home-building approvals declined in May for a second straight month as employment growth weakened in an economy recovering from the nations most expensive natural disasters. The number of permits granted to build or renovate houses and apartments fell 7.9 percent from April, when they dropped a revised 0.3 percent, the Bureau of Statistics said in Sydney today. The median forecast was for a 0.5 percent decline in a Bloomberg News survey of 23 economists. (Bloomberg) Australia's RBA widely expected to sit pat on rates in July as it waits for second quarter inflation data due later this month, a Reuters poll found. Faced with slower jobs growth and a weaker global economic recovery, the Reserve Bank of Australia (RBA) will probably stay on the sidelines for an eight straight month this month, maintaining the cash rate at 4.75 percent before hiking rates at least once this year and several times next year, taking the cash rate to 5.50 percent by the third quarter of 2012. (Reuters) Other Asia Appetite for Indian IPOs Wanes. The amount of money raised through initial public offerings in India has fallen by more than 80 per cent year on year, as waning appetite from investors for new issues has prompted large companies to postpone their listings. According to figures from data provider Dealogic, in the past six months there have been 22 listings in India, raising a combined $780m well down on the same period last year when just over $4bn was raised in India through 28 IPOs. Samsung sees tough second half for components. The Samsung Electronics Co. executive who will lead its newly merged component-manufacturing businesses said that the second half of the year is going to more difficult than the first. The two businessesproducing semiconductors and flat-panel displayslast year provided 70% of Samsung's operating profit, but both are experiencing difficulties, said Kwon Oh-hyun. The chief of Samsung's chip business, he was tapped to lead the combined unit, to be called its Device Solutions business. (WSJ) Korea FX reserves slid to USD 304.48bn in June from USD 305.08bn in May. South Korea's foreign-exchange reserves fell for a second straight month in June due to a decline in the value of non-dollar assets as a result of the greenback's gains, the Bank of Korea said Monday. Reserves totaled $304.48 billion at the end of June, down $600 million from May's $305.08 billion and April's record high of $307.2 billion. The BOK attributed the decline to the weakness of the U.K. pound against the dollar, which caused a decline in non-dollar assets. (Bloomberg and Reuters)

Thailands opposition sweeps to victory. Yingluck Shinawatra is to become Thailands first female prime minister after the main opposition party swept to victory in the countrys hotly contested elections. The vote represents a clear rejection of Thailands conservative establishment five years after Thaksin Shinawatra, Ms Yinglucks brother and former prime minister, was toppled in an army coup. (FT) Thai PM steps down as party leader after election loss Thai Prime Minister Abhisit Vejjajiva said on Monday he had decided to step down as leader of his Democrat Party, a day after its loss to the opposition Puea Thai Party led by Yingluck Shinawatra. (Reuters) India's NALCO extends discount on rolled products State-run National Aluminium Co Ltd, India's third-largest producer of aluminium, has extended a discount of 2,000 rupees ($44.8) per tonne on rolled products until the end of July, a senior executive said. (Reuters) France seeks to tap Indonesia infrastructure needs French Prime Minister Francois Fillon pushed to double trade and boost investment with Indonesia on a state visit to Jakarta on Friday, as French firms in his entourage pledged over $2.5 billion of energy and infrastructure investments. (Reuters) US No liquidity operation scheduled from end. The Federal Reserve has no liquidity operations scheduled for Friday. The central bank completed its $600 billion QE2 Treasury bond buying program Thursday but is scheduled to buy Treasurys in coming weeks using proceeds from its maturing holdings of agency and agency mortgage-backed securities. Fed funds were last quoted at 0.090%, compared to the federal-fund target range of 0 to 0.25%, according to Tullett Prebon data. (Reuters) ISM stronger than expected. The ISM manufacturing index in June came in stronger than expected in the US as opposed to the weakening PMIs in China and Europe. The index partially rebounded from an almost 7pp plunge in May rising 1.8pp to 55.3. The rebound was broadbased, but moderate, as all five subcomponents posted a modest increase. Inventories increased 5.4pp rising from the contraction territory; employment was up 1.7pps. New orders and production changed only slightly, rising 0.6pp and 0.5pp respectively. The prices paid index was the lowest since last August suggesting price pressures are abating. The June increase likely reflects that supply chains disrupted following the March earthquake in Japan are currently being restored. (BNP Paribas) US Bank Business Loans Down $1.6 Bln in latest week ended June 22, the Federal Reserve said Friday, Foreign Exchange Strategy Monday, 04 July 2011 http://www.GlobalMarkets.bnpparibas.com

following a $100 million decrease the previous week. (Reuters) Richmond Fed's Lacker: Fed Must Focus On Keeping Inflation Low, further monetary stimulus would "almost entirely" show up in inflation, which is already too high, gives QE2 "decent marks" but jury still out on whether it was a success, sees U.S. economy picking up in second half of year and growth settling between 3% and 4% next year. (Reuters) Employers in the U.S. probably expanded payrolls at a pace that failed to reduce the unemployment rate in June as companies sought to contain costs amid slower growth, economists said a report may show this week. (Bloomberg) US Treasury sticks with Aug. 2 deadline, urges Congress to avoid "catastrophic" default; VP Biden calls political posturing vindictive and Obama economic advisers due on Hill next week. Democratic officials said a deal needs to be in place by July 22 to give Congress enough time to pass it, though some budget experts question whether that would even yield enough time. (Reuters) The final reading for the Thomson Reuters/University of Michigan survey showed. consumer sentiment index came in at 71.5, down from 74.3 the month before. It was a hair below the preliminary June figure of 71.8 and shy of the median forecast for 71.9 among economists polled by Reuters. (Reuters) U.S. construction spending fell for a sixth straight month during May to its lowest in more than a decade, according to a Commerce Department report on Friday that underlined the soft pace of activity in building trades that normally are major employers. Spending on new construction fell 0.6 percent after a matching revised 0.6 percent April drop that previously was reported as a 0.4 percent increase. Economists surveyed by Reuters had forecast May construction spending would be flat. (Reuters)

Daily Currency Summary

G3
The Eurogroup approved the next tranche of aid for Greece over the weekend, and 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, the RBA and (if we see one) a decent Australian employment report this week should see AUDJPY push on.

EURUSD

USDJPY

JPY Crosses

EUR Bloc
UK manufacturing PMI details were very weak; 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. Also slowest output price inflation since December 2010. EURGBP this finds easy progress north on a steady to firmer EURUSD and GBP/Scandies, GBPAUD also remain under the cosh. 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 has fallen back and could consolidate lower down to 1.1630 support 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 fall maintain traction. Sweden PMI fell in June like elsewhere. An expected Riksbank rate hike to 2.00% on Tuesday should add to SEKs gains.

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 AUD post-Greek budget rebound continues to show surprising strength, shaking off both the Chinese PMI and todays retail sales. We expect the risk rally to continue this week as markets remove the pricing of rate cuts; given the easing in euro-peripheral tensions, it would not surprise to hear the RBA sounding a little less neutral tomorrow than it did last month. In the meantime, AUDUSD continues to climb and it seems the market is not long: 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. We see little to suggest that this will change in the coming week, seeing further gains as likely on strong Q1 GDP and the NZIER business survey.

USDCAD

AUDUSD

NZDUSD

Foreign Exchange Strategy Monday, 04 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 Monday, 04 July 2011 http://www.GlobalMarkets.bnpparibas.com

FX - Global Strategy Contacts

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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Foreign Exchange Strategy Monday, 04 July 2011 http://www.GlobalMarkets.bnpparibas.com