WEEKLY CHANGES AGAINST THE USD MACRO & MARKETS COMMENTARY

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1 July 03, 2017 [ W E E K LY E C O N O M I C C O M M E N TA R Y ] WEEKLY ANALYSIS FOR THE MOST CRITICAL ECONOMIC AND FINANCIAL DEVELOPMENTS MACRO & MARKETS COMMENTARY» Central banker s comments dominated the scene last week. Bank of England s Governor Mark Carney cautioned that there is a limit to the BOE s tolerance for above target inflation deviating from the more-patient stance he voiced in the last BOE meeting in June. European Central Bank s President stated last week that the ECB could adjust the policy parameters of the bank s stimulus program not to tighten policy but to keep it broadly unchanged, a statement that was considered less dovish compared to the previous comments from Mr. Draghi. Dollar spot index (DXY - the index that tracks the performance of the U.S. dollar against major world currencies) rose by 1.68% (or 1.64 points) over the week, closing its weekly trading session at point on the 30 th of June 2017, compared to at last week s close. EUR/USD rose by 2.07% [or 232 pips], closing its weekly trading session at $ per Euro on Friday, the 30 th of June 2017.» Crude oil prices capped its longest rally since the beginning of the year after a report showed that the number of U.S oil active rigs declined for the first time since January this year [ According to Baker Hughes, total rigs declined by 2 rigs to 756]. West Texas Intermediate WTI (August 2017 Delivery) rose during the week by 7.04 % [or $3.03] per barrel to $46.04 per barrel. Brent crude prices (September 2017 Delivery) ended the week higher by 5.23%, or $2.38 per barrel, closing at $47.92 on Friday, the 30th of June WEEKLY CHANGES AGAINST THE USD MAJOR MARKETS 96% 84% 72% 60% 48% 36% 24% 12% 0% (12%) (1.20%) 7.04% 5.23% 2.07% 2.41% 1.00% (0.81%) 7.56% 83.79% GOLD WTI BRENT EUR GBP JPY CNY US 10Y Yield GE 10Y Yield Measure of Money Supply M3: M3 is a measure of money supply that includes M2 large time deposits, institutional money market funds, short-term repurchase agreement, and other larger liquid assets.

2 TREASURY RESEARCH WEEKLY ECONOMIC COMMENTARY 03 JULY 2017 PAGE 2» U.S Treasuries fell after the hawkish remark of the European Central Bank (ECB) president that fuelled sell-off during the week. The yield on the benchmark 10 year Treasury soar by 16.2 basis points (bps) or 7.56% over the week, closing its weekly trading session at 2.305% on the 30 th of June 2017 [ the highest level since May 2017]. ECONOMIC DATA & EVENTS FROM THE LAST WEEK. U.S.A & CANADA US first quarter GDP was revised up to 1.4% Q/Q (annualized rate) compared to 1.2% previously estimated. Initial jobless claims in the United States climbed to 244K in the week ending June 24 following the revised-up reading to 242K in the prior week. MBA mortgage applications fell 6.2% in the week ending June 23 compared to 0.6% increase in the preceding week. Pending home sales fell 0.8% M/M in May following the revised up decline to 0.7% M/M in April. Durable goods orders fell 1.1% in May preliminary estimate following the revised up decline to 0.9% in April. Personal income increased 0.4% in May compared to 0.3% increase in April. Personal spending increased 0.1% in May following 0.4% increase in April. Wholesale inventories increased 0.3% M/M in May preliminary estimate following the revised down decline to 0.4% M/M in April. Consumer confidence index unexpectedly rose to in June compared to the revised down reading to in May. University of Michigan sentiment was revised up to 95.1 in June final estimate from 94.5 previously estimated. The Canadian economy expanded 0.2% M/M in April as expected following 0.5% M/M increase in March. UK & JAPAN GDP in the UK was confirmed at 0.2% Q/Q and 2% Y/Y in Q1 final estimate as expected, the same as previously estimated. House price index rose 3.1% Y/Y in June following 2.1% Y/Y in May. Mortgage approvals unexpectedly increased to 65.2K in May following the revised up reading to 65.1K in April. In Japan, industrial production fell 3.3% M/M in May preliminary estimate compared to 4% M/M increase in April. Jobless rate unexpectedly rose to 3.1% in May from 2.8% in April. Job to applicant ratio rose to 1.49 in May from 1.48 in April. CPI inflation kept stable at 0.4% Y/Y in May, the same as in April. Retail trade grew 2% Y/Y in May compared 2.6% Y/Y expected, and following 3.2% Y/Y growth rate in April. EUROZONE Measure of money supply M3 in the Euro Area grew 5% Y/Y in May as expected following 4.9% Y/Y growth rate in April. Consumer confidence index was confirmed at -1.3 in June final estimate as expected. CPI estimate came in at 1.3% Y/Y in June compared to 1.4% Y/ Y in May. In Germany, unemployment change came in at 7K in June compared to -10K expected and following the revised up reading to -7K in May. CPI inflation accelerated to 1.6% Y/Y in June preliminary estimate from 1.5% Y/Y in May. IFO business climate unexpectedly rose to in June from in May.

3 TREASURY RESEARCH WEEKLY ECONOMIC COMMENTARY 03 JULY 2017 PAGE 3 IFO expectations rose to in June from in May. IFO current assessment climbed to in June from in May (revised up). Consumer confidence index rose to 10.6 in July from 10.4 in June. CPI inflation in France decelerated slightly to 0.7% Y/Y as expected in June preliminary estimate following 0.8% Y/Y in May. Consumer confidence index rose to 108 in June from 103 in May. In Italy, CPI EU harmonized decelerated to 1.2% Y/Y in June preliminary estimate compared to 1.6% Y/Y in May. Manufacturing confidence unexpectedly rose to in June from in May. Consumer confidence index rose above expectations to in June from in May. CPI inflation in Spain decelerated below expectations to 1.5% Y/Y in June preliminary estimate from 1.9% Y/Y in May. Retail sales grew 3.8% Y/Y in May following 1% Y/Y decline in April. EMERGING MARKET, In Brazil, Inflation came in at -0.67% M/M in June following -0.93% M/M, and compared to -0.65% M/M expected. Total outstanding loans decreased to $3065 billion in May following the revised down reading to $3070 billion in April. The current account posted a surplus of $2884 million in May, which is more than expected and above than $1153 million surplus registered in April. Net debt to GDP ratio rose to 48.1% in May from 47.7% in April. Chinese manufacturing PMI climbed to 51.7 in June from 51.2 in May. Russian gold and FOREX reserve increased to $408.8 billion in the week ending June 23 from $406.4 billion in the previous week. GDP growth was confirmed at 0.5% Y/Y in Q1 final estimate as expected. The current account balance came in at $23300 million in Q1 final estimate compared to $22800 million previously estimated. GCC & MENA, The Turkish trade balance posted a deficit of $7.31 billion in May compared to the revised down deficit to $4.92 billion in April.

4 TREASURY RESEARCH WEEKLY ECONOMIC COMMENTARY 03 JULY 2017 PAGE 4 WEEKLY CLOSING FX CHART POUND STERLING WEEKLY CLOSING FX CHART EURO & JAPANESE YEN 1.80 GBP/USD Jun 30 CLOSE $ EUR / USD Jun 30 CLOSE $ USD / JPY Jun 30 CLOSE WEEKLY CLOSING CRUDE OIL USD PER BARREL WEEKLY CLOSING SPOT GOLD USD PER OUNCE 150 NYMEX WTI Crude Weekly closing Jun 30 CLOSE $46.04 ICE Brent Crude Weekly closing Jun 30 CLOSE $47.92 Gold Spot price, quoted as US Dollars per Troy Ounce Jun 30 CLOSE $ WEEKLY CLOSING GOVERNMENT BOND YIELDS USA & GERMANY WEEKLY CLOSING GOVERNMENT BOND YIELDS ITALY & SPAIN U.S 10 - year government Bond Jun 30 CLOSE 2.31% Italy 10 - year government Bond Jun 30 CLOSE 2.15% 3.7 Germany 10 - year government Bond Jun 30 CLOSE 0.47% 6.5 Spain 10 - year government Bond Jun 30 CLOSE 1.52%

5 TREASURY RESEARCH WEEKLY ECONOMIC COMMENTARY 03 JULY 2017 PAGE 5 PROFIT RATE BENCHMARK ENERGY / COMMODITIES USD TENOR LIBOR SIBOR SAR - DEP LAST PRICE WTD 1 - Month GOLD - SPOT 1, (1.20%) 3 - Month SILVER - SPOT (0.48%) 6 - Month ALUMINUM - LME 3 MTH 1, % 9 - Month COPPER - LME 3 MTH 5, % 12 - Month WTI - NYMEX % BRENT - ICE % Foreign Exchange STOCKS INDEXES WEEKLY CLOSING Spot SAR Equ WTD Index Closed WTD GBP / USD % S&P 500 2,423 (0.61%) EUR / USD % Dow Jones 21,350 (0.21%) AUD / USD % NASDAQ 6,140 (1.99%) USD / CHF (1.18%) FTSE 100 7,313 (1.50%) USD / CAD (2.28%) DAX Index 12,325 (3.21%) USD / JPY % CAC Index 5,121 (2.76%) USD / CNY (0.28%) Nikkei ,033 (0.49%) USD / SAR (0.04%) TASI Index 7, % WEEK AHEAD ECONOMIC CALENDAR DATE COUNTRY ECONOMIC RELEASE /EVENTS PERIOD EXPECTED * PRIOR IMPORTANCE Mon 03 / 07 04:45 CH Caixin China PMI Mfg Jun Mon 03 / 07 10:55 GE Markit/BME Germany Manufacturing PMI Jun F Mon 03 / 07 11:00 EC Markit Eurozone Manufacturing PMI Jun F Mon 03 / 07 11:30 UK Markit UK PMI Manufacturing SA Jun Mon 03 / 07 16:45 US Markit US Manufacturing PMI Jun F Mon 03 / 07 17:00 US ISM Manufacturing Jun Wed 05 / 07 17:00 US Factory Orders May -0.50% -0.20% Thu 06 / 07 09:00 GE Factory Orders MoM May 1.80% -2.10% Thu 06 / 07 14:00 US MBA Mortgage Applications Jun % Thu 06 / 07 15:30 US Initial Jobless Claims Jul k 244k Fri 07 / 07 09:00 GE Industrial Production SA MoM May 0.20% 0.80% Fri 07 / 07 11:30 UK Manufacturing Production MoM May 0.40% 0.20% Fri 07 / 07 11:30 UK Industrial Production MoM May 0.40% 0.20% Fri 07 / 07 15:30 US Unemployment Rate Jun 4.30% 4.30% Fri 07 / 07 15:30 US Change in Nonfarm Payrolls Jun 177K 138K Source: Bloomberg for forecasting

6 TREASURY RESEARCH WEEKLY ECONOMIC COMMENTARY 03 JULY 2017 PAGE 6 THE WEEKLY ECONOMIC COMMENTARY IS PREPARED & EDITED BY: ABDULKARIM I. ALKADRI Research - Senior Analyst / aialkadri@bankalbilad.com TREASURY CONTACT LIST SAMER.M.A. FARHOUD General Manager - Treasury Division Sm.farhoud@Bankalbilad.com SAJJAD HUSSAIN Chief Dealer S.hussain@bankalbilad.com FOREIGN EXCHANGE Ext Fxdesk@bankalbilad.com MONEY MARKET Ext MMDesk@bankalbilad.com SALES & BANKNOTES Salesdesk@bankalbilad.com TREASURY SUPPORT Halosaimi@bankalbilad.com DISCLOSURE APPENDIX ANALYST DISCLAIMER Research analyst (s) responsible for the content of this research report certify that the views expressed and attributed to the research analyst (s) in the research report accurately reflect their personal views about the subject matters discussed. No part of their compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in the research report. The views of the author (s) do not necessarily reflect the views of Bank Al Bilad and are subject to change without notice. ADDITIONAL DISCLOSURES This report is dated as at 03 July All market data included in this report are dated as at close 1 July 2017, unless otherwise indicated in this report. DISCLAIMER This report is prepared for information purpose only. It should not be construed as an offer to sell or a solicitation of an offer to purchase or subscribe to any investment. Although the information contained in this report is obtained from many sources believed to be reliable, Bank Al Bilad does not guarantee its completeness or accuracy. To the extent permitted by applicable laws and regulations in the Kingdom of Saudi Arabia, neither Bank Al Bilad nor any of its affiliates, their directors, officers and employees will be liable or have any responsibility of any kind for any loss or damage that may be incurred as a result of using the information contained in this report.