fx strategy Great expectations from BoJ, less so from the Fed fx 25 July 2016 This reflects the views of the Wealth Management Group

Size: px

Start display at page:

Download "fx strategy Great expectations from BoJ, less so from the Fed fx 25 July 2016 This reflects the views of the Wealth Management Group"

Dayna Benson
5 years ago
Views:

1 fx strategy fx 25 July 2016 This reflects the views of the Wealth Management Group Great expectations from BoJ, less so from the Fed Two key policy meetings are likely to shape currency markets during the week; the Fed on Wednesday and the BoJ on Friday. We expect the Fed to maintain status quo with largely cautious forward guidance but highlight the possibility of a rate hike in They may avoid a more hawkish tone as this could be destabilising for markets. We expect further downside in EUR/USD and GBP/USD. Though further BoJ easing in the form of additional asset purchases and further rate cuts are likely, this may already be priced-in. Hence, anything short of a significant surprise in terms of unconventional policy measures might not significantly weaken the JPY. We would use any bounce in USD/JPY to reduce exposure. In other data this week, GDP and inflation data in US, Euro area, Japan and the UK are likely to affect sentiment on currencies. Pairs Outlook (2-4 wk) Summary comments Support 2 Support 1 Spot Resistance 1 Resistance 2 EUR/USD Bearish Chart pattern maintains an overall bearish technical setup USD/JPY Bearish BoJ action unlikely to reverse current USD/JPY downtrend AUD/USD Bearish Downward bias confirmed following last week s decline USD/SGD Bullish Impulsive rebound from key support suggests further upside GBP/USD Bearish Failure to break the suggests downtrend intact XAU/USD Bullish Likely to find strong support around the 1300 region NZD/USD Bearish Recent pullback confirms possibility of a deeper correction EUR/GBP Bullish Breach above a key resistance area suggests a deeper rally USD/CNH Possibility of consolidation amid slowing momentum indicators USD/CHF Consolidation to continue, SNB to limit significant CHF appreciation USD/CAD Consolidation continues, a break of needed to signal bulls AUD/NZD Bullish Bullish break-out suggests further gains ahead Darker shade indicates more important technical levels This commentary reflects the views of the Wealth Management Group of Standard Chartered Bank. Important disclosures can be found in the Disclosures Appendix. This document is provided for general circulation and information purposes only, it does not take into account the specific investment objectives, needs or financial situation of any particular person or class of persons and it has not been prepared as investment advice for such person(s). Person includes a corporation, cooperative society, trade union, sole proprietorship, partnership, limited liability partnership and any other business entity. Prospective investors should seek advice from a financial adviser on the suitability of an investment, taking into account these factors before making a commitment to invest in an investment. 1

2 Contents Great expectations from BoJ, less so from the Fed 1 12 month outlook week outlook 3 FX trade ideas 3 Week in Review 4 EUR/USD 5 USD/JPY 6 AUD/USD 7 USD/SGD 8 GBP/USD 9 XAU/USD 10 NZD/USD 11 Interest Rate Differentials 15 FX Implied Volatility 16 Consensus forecasts 17 Disclosure Appendix 19 Steve Brice Clive McDonnell Manpreet Gill Adi Monappa, CFA Audrey Goh, CFA Arun Kelshiker, CFA Rajat Bhattacharya Victor Teo, CFA Tariq Ali, CFA Abhilash Narayan Trang Nguyen Chief Investment Strategist Head, Equity Investment Strategy Head, FICC Investment Strategy Head, Asset Allocation & Portfolio Construction Director, Asset Allocation & Portfolio Construction Executive Director, Asset Allocation & Portfolio Construction Investment Strategist Investment Strategist Investment Strategist Investment Strategist Analyst, Asset Allocation & Portfolio Solutions This commentary reflects the views of the Wealth Management Group of Standard Chartered Bank. 2

3 12 month outlook 2-4 week outlook Currency EUR JPY GBP AUD NZD CAD CHF CNY TWD KRW SGD MYR IDR INR THB PHP Bullish Bearish Please see the latest Global Market Outlook for more details 12 month Pairs EUR/USD USD/JPY AUD/USD USD/SGD GBP/USD XAU/USD NZD/USD EUR/GBP USD/CNH USD/CHF USD/CAD AUD/NZD FX trade ideas Outlook (2-4 wk) Bearish Bearish Bearish Bullish Bearish Bullish Bearish Bullish Bullish Entry Current Initiation date Pairs Position price price Target Stop 01/7/2016 EUR/USD Short /7/2016 GBP/USD Short /07/2016 XAU/USD Long /7/2016 USD/JPY Short Please see the corresponding FX trade note for more details on each trade idea This commentary reflects the views of the Wealth Management Group of Standard Chartered Bank. 3

4 Week in Review Weekly performance of core pairs 15 July 2016 to 22 July 2016 EUR/USD USD/JPY AUD/USD USD/SGD GBP/USD XAU/USD NZD/USD Weekly performance of supplementary pairs 15 July 2016 to 22 July 2016 EUR/GBP USD/CNH USD/CHF USD/CAD AUD/NZD Pairs EUR/USD USD/JPY AUD/USD USD/SGD GBP/USD XAU/USD NZD/USD Week in Review EUR/USD ended down (-0.53). The EUR extended its decline amid mixed Euro area economic data. In the US, data was a bit stronger while a rise in US 2-year yields further supported the USD. ECB maintained status quo but highlighted willingness to ease further if data weakens. USD/JPY ended up (1.19). The JPY lost ground against the USD for another week amid better investor sentiment, a stronger USD and expectations of further BoJ policy easing. AUD/USD ended down (-1.53). The AUD fell further during the week amid a pullback in commodity prices and a stronger USD overall. Australia s 2-year government bond yields also fell amid expectations of further rate cuts by the RBA USD/SGD ended up (0.79). The USD/SGD rallied last week as the stronger USD and higher treasury yields waned sentiment towards Asian currencies. GBP/USD was down (0.63). The GBP fell against the USD as manufacturing/service/composite PMI indicators fell into contraction. Wage data was also weaker than expected though the unemployment rate decline further to 4.9. XAU/USD was down (-1.10). The safe haven asset fell further amid improved risk appetite during the week and a rise in US and Euro area government bond yields. NZD/USD was down (-1.67). The NZD fell further after a RBNZ report signalled a possible rate cut amid low inflation and a strong currency. This commentary reflects the views of the Wealth Management Group of Standard Chartered Bank. 4

5 EUR/USD We remain bearish amid a higher probability of a Fed rate hike and bearish technical signals. Fundamental Overview The ECB decision to maintain policy status quo largely rested on the need to see increased Euro area economic data before deciding on the level of accommodation required. This now shifts the focus to August. Euro area inflation and GDP data this week will be key. Beyond this, an increased probability of a Fed rate hike in 2016 could also further weaken the EUR. Technical Analysis While continuing to trade broadly sideways, last week s price action suggests a deeper corrective phase can develop. Following breach of the support level, the next major support now lies at 1.082, A breach of which can open room towards Dec low at Near term bounces in this bearish technical setup are likely to be restricted to the region. Chart pattern maintains an overall bearish technical set-up EUR/USD Mar-15 Apr-15 May-15 Jul-15 Aug-15 Oct-15 Nov-15 Jan-16 Feb-16 Apr-16 May-16 Jul-16 EUR/USD 50DMA 100DMA 200DMA Bearish Key technical indicators* Technical Indicator RSI (14) Oscillator (5,10) MACD (12,26,9) ADX (14) Momentum (14) Action Key Levels Level Importance Resistance High Resistance Medium Spot Support High Support Medium Key Signposts Fed policy rate Jul 27 Euro area core CPI Jul 29 Euro area 2Q GDP Jul 29 * Please see Appendix for explanation on technical This commentary reflects the views of the Wealth Management Group of Standard Chartered Bank. 5

6 USD/JPY We remain bearish, not expecting a significant surprise from the BoJ policy this week. Fundamental Overview With a clear focus on BoJ this week, the question is, can the BoJ surprise markets? With direct financing of government debt already off the cards, we believe the BoJ has few ways to significantly increase stimulus. In any case, we do not believe incremental asset purchases or further cutting rates into negative territory can reverse the USD/JPY trend. Technical Analysis Failure to extend the rally beyond the region (38.2 retracement from the Jan high and key moving averages) suggests possibility of a pullback, we believe. A breach of this region is likely to see rallies towards the region. Pullbacks could find support in the region, though a break of 100 is needed to signal a much deeper corrective action. BoJ action unlikely to reverse the current USD/JPY downtrend USD/JPY Feb-15 Apr-15 May-15 Jul-15 Aug-15 Oct-15 Nov-15 Jan-16 Feb-16 Mar-16 May-16 Jun-16 USD/JPY 50DMA 100DMA 200DMA Bearish Key technical indicators* Technical Indicator RSI (14) Oscillator (5,10) MACD (12,26,9) ADX (14) Momentum (14) Action Buy Buy Buy Key Levels Level Importance Resistance High Resistance Medium Spot Support High Support Medium Key Signposts Fed Policy rate July 27 Japan CPI July 28 BoJ policy rate July 29 * Please see Appendix for explanation on technical This commentary reflects the views of the Wealth Management Group of Standard Chartered Bank. 6

7 AUD/USD We remain bearish as technical s suggest further downside. Fundamental Overview This week, the focus is on Australia CPI data. In the previous release, weaker than expected inflation resulted in the RBA cutting interest rates. The RBA has already indicated that it has room to further ease policy should inflation remain weak. Hence, we believe, the AUD is likely to remain weak on anticipation of further easing, barring any significant upside data surprises. Technical Analysis The impulsive reversal from this month s high suggests a deeper pull-back may be underway. A break-down from here could find support near the June lows around the region. Below this the area corresponding to the H tops and the 200DMA could limit downside. On the upside, we would need a break of to indicate a stronger uptrend. Downward bias confirmed following last week s decline AUD/USD Feb-15 Apr-15 May-15 Jul-15 Aug-15 Oct-15 Nov-15 Jan-16 Feb-16 Mar-16 May-16 Jun-16 AUD/USD 50DMA 100DMA 200DMA Bearish Key technical indicators* Technical Indicator RSI (14) Oscillator (5,10) MACD (12,26,9) ADX (14) Momentum (14) Action Key Levels Level Importance Resistance High Resistance Medium Spot Support Medium Support High Key Signposts Australia CPI inflation Jul 27 * Please see Appendix for explanation on technical This commentary reflects the views of the Wealth Management Group of Standard Chartered Bank. 7

8 USD/SGD We remain bullish following a rebound from an important support region and stronger USD. Fundamental Overview Although Asia-ex-Japan currencies are likely to be less impacted from events in Europe, we believe the short-term extension of USD strength against regional currencies (especially USD/SGD) can continue. With markets pricing a low probability of a 2016 rate hike, risks are tilted towards an upside surprise (in terms of higher US rates). However, there may be limits to USD/SGD upside, as the Fed may remain fairly dovish overall. Technical Analysis Recent uptick in the pair following a rebound from a key support region suggests a possibility of a deeper rally. However, we believe, near-term resistance at is likely to be key. Any breach from here could open the way to test the May high at Pullbacks could be limited to the region, where a strong basing support appears to have formed. Impulsive rebound from key support suggests further upside USD/SGD Feb-15 Apr-15 May-15 Jul-15 Aug-15 Oct-15 Nov-15 Jan-16 Feb-16 Mar-16 May-16 Jun-16 USD/SGD 50DMA 100DMA 200DMA Bullish Key technical indicators* Technical Indicator RSI (14) Oscillator (5,10) MACD (12,26,9) ADX (14) Momentum (14) Action Buy Buy Buy Key Levels Level Importance Resistance High Resistance Medium Spot Support Medium Support High Key Signposts Singapore industrial production 26 July Fed Policy rate July 27 * Please see Appendix for explanation on technical This commentary reflects the views of the Wealth Management Group of Standard Chartered Bank. 8

9 GBP/USD We remain bearish expecting a further drift lower towards recent lows. Fundamental Overview The GBP rebounded after the new UK PM and government were appointed quickly and the BoE decided to maintain status quo. However, we believe this is not likely to diminish medium term risk factors significantly. Risk of capital flight amid a large current account deficit, the possibility of sharp economic slowdown and BoE easing policy and further political risks (including a second Scottish referendum) are key risks that remain in place. Technical Analysis The pair failed to break the region, suggesting some consolidation in the near term. The recent impulsive decline highlights potential for a deeper correction. Focus is now on the key psychological zone, a breach of which could result in testing of the recent lows. Failure to break the suggests downtrend intact GBP/USD Mar-15 Apr-15 May-15 Jul-15 Aug-15 Oct-15 Nov-15 Jan-16 Feb-16 Apr-16 May-16 Jul-16 GBP/USD 50DMA 100DMA 200DMA Bearish Key technical indicators* Technical Indicator RSI (14) Oscillator (5,10) MACD (12,26,9) ADX (14) Momentum (14) Action Buy Key Levels Level Importance Resistance High Resistance Medium Spot Support Medium Support High Key Signposts UK 2Q GDP Jul 27 UK housing prices Jul 28 * Please see Appendix for explanation on technical This commentary reflects the views of the Wealth Management Group of Standard Chartered Bank. 9

10 XAU/USD We remain bullish, viewing the recent correction as an opportunity to renew long exposure. Fundamental Overview Gold is likely to remain in demand following renewed political uncertainty in Europe, reduced risk appetite and a scaling back of interest rate expectations across major regions. Hence, we believe, any pullback is likely to be bought into. However, eventual Fed rate hike expectations could ultimately put a cap on gold prices. Technical Analysis The recent pullback is likely to find support around the 1,300-1,320 region (61.8 retracement of the recent rally). A rebound from here would indicate the uptrend remains intact and is first likely to test the recent high at 1,375 and then the psychological 1,400 level. On the downside, a break of 1,300 could to lead to the 1,250 support region. Likely to find strong support around the 1300 region XAU/USD 1,400 1,350 1,300 1,250 1,200 1,150 1,100 1,050 1,300 1,375 1,000 Feb-15 Apr-15 May-15 Jul-15 Aug-15 Oct-15 Nov-15 Jan-16 Feb-16 Mar-16 May-16 Jun-16 XAU/USD 50DMA 100DMA 200DMA Bullish Key technical indicators and forecast* Technical Indicator RSI (14) Oscillator (5,10) MACD (12,26,9) ADX (14) Momentum (14) Action Buy Key Levels Level Importance Resistance High Resistance Medium Spot 1317 Support Medium Support High Key Signposts Fed policy rate Jul 27 BoJ Policy rate Jul 29 * Please see Appendix for explanation on technical This commentary reflects the views of the Wealth Management Group of Standard Chartered Bank. 10

11 NZD/USD We remain bearish amid a bearish technical setup and increasing possibility of an RBNZ rate cut. Fundamental Overview The NZD has remained resilient so far amid increased demand for higher yielding AAA rated assets and a generally stable China outlook. However, the probability of another RBNZ rate cut also remains high, which could limit any NZD rally. Recent lower than expected inflation data has significantly increased this probability. Focus now, however, is clearly on the 11 August policy meeting with rising expectations of additional policy easing. Technical Analysis The recent bearish reversal from a strong resistance region suggests a deeper pullback might be underway. The focus is now on the level (near 100DMA), a breach of which will shift the focus to the region. Technical indicators have also turned firmly bearish. Recent pullback confirms possibility of a deeper correction NZD/USD Feb-15 Apr-15 May-15 Jul-15 Aug-15 Oct-15 Nov-15 Jan-16 Feb-16 Mar-16 May-16 Jun-16 NZD/USD 50DMA 100DMA 200DMA Bearish Key technical indicators and forecast* Technical Indicator RSI (14) Oscillator (5,10) MACD (12,26,9) ADX (14) Momentum (14) Action Buy Buy Key Levels Level Importance Resistance Medium Resistance High Spot Support Medium Support Medium Key Signposts No Major data releases * Please see Appendix for explanation on technical xxx This commentary reflects the views of the Wealth Management Group of Standard Chartered Bank. 11

12 SUPPLEMENTARY PAIRS Breach above a key resistance area suggests a deeper rally View EURGBP Feb-15 Apr-15 May-15 Jul-15 Aug-15 Oct-15 Nov-15 Jan-16 Feb-16 Mar-16 May-16 Jun-16 EUR/GBP 50DMA 100DMA 200DMA Bullish The pair has undergone a recent overbought corrective phase, which is likely to find support at the region. We expect increased political and economic risks in the UK to support further gains in the EUR/GBP pair. Possibility of consolidation amid slowing momentum indicators View USD/CNH Feb-15 Apr-15 May-15 Jul-15 Aug-15 Oct-15 Nov-15 Jan-16 Feb-16 Mar-16 May-16 Jun-16 USD/CNH 50DMA 100DMA 200DMA We remain neutral USD/CNH. Technically, as slowing momentum indicators suggest bulls might be getting exhausted. However, policymaker preference for a weaker CNY might ultimately limit any pull-back. This commentary reflects the views of the Wealth Management Group of Standard Chartered Bank. 12

13 SUPPLEMENTARY PAIRS (cont d) Consolidation to continue, SNB to limit significant CHF appreciation View 1.04 USD/CHF Feb-15 Apr-15 May-15 Jul-15 Aug-15 Oct-15 Nov-15 Jan-16 Feb-16 Mar-16 May-16 Jun-16 USD/CHF 50DMA 100DMA 200DMA We expect continued sideways movements around a broad range. The soft peg to the EUR and SNB intervention to limit currency strength is likely to persist. Consolidation continues, a break of needed to signal bulls View USD/CAD Feb-15 Apr-15 May-15 Jul-15 Aug-15 Oct-15 Nov-15 Jan-16 Feb-16 Mar-16 May-16 Jun-16 USD/CAD 50DMA 100DMA 200DMA Likely to consolidate near term, as oil prices fall into consolidation Tight sideways consolidation continues, break above needed as a first sign of a leg up. This commentary reflects the views of the Wealth Management Group of Standard Chartered Bank. 13

14 SUPPLEMENTARY PAIRS (cont d) Bullish break-out suggests further gains ahead View 1.15 AUD/NZD Feb-15 Apr-15 May-15 Jul-15 Aug-15 Oct-15 Nov-15 Jan-16 Feb-16 Mar-16 May-16 Jun-16 AUD/NZD 50DMA 100DMA 200DMA Bullish We remain bullish expecting the recent impulsive reversal to further develop. Strong resistance likely at Increased probability of further RBNZ rate cuts following the weaker New Zealand inflation numbers could induce further upside. This commentary reflects the views of the Wealth Management Group of Standard Chartered Bank. 14

15 Interest Rate Differentials EUR/USD USD/JPY AUD/USD Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 EUR-USD 2 year interest rate differential EUR/USD (RHS) EUR/USD Jul-13 Apr-14 Jan-15 Oct-15 Jul-16 USD-JPY 2 year interest rate differntial (RHS) USD/JPY USD/JPY Jul-13 Apr-14 Jan-15 Oct-15 Jul-16 AUD-USD 2 year interest rate differntial (RHS) AUD/USD (RHS) AUD/USD GBP/USD NZD/USD USD/CAD GBP/USD NZD/USD USD/CAD Jul-13 Jul-14 Jul-15 Jul-16 GBP-USD 2 year interest rate differntial (RHS) GBP/USD (RHS) Jul-13 Jul-14 Jul-15 Jul-16 NZD-USD 2 year interest rate differntial (RHS) NZD/USD (RHS) Jul-13 Jul-14 Jul-15 Jul-16 USD-CAD 2 year interest rate differntial (RHS) USD/CAD (RHS) This commentary reflects the views of the Wealth Management Group of Standard Chartered Bank. 15

16 FX Implied Volatility EUR/USD USD/JPY AUD/USD Jul-13 Apr-14 Jan-15 Oct-15 Jul-16 EUR 1M implied vol Jul-13 Apr-14 Jan-15 Oct-15 Jul-16 JPY 1M implied vol Jul-13 Apr-14 Jan-15 Oct-15 Jul-16 AUD 1M implied vol GBP/USD NZD/USD USD/CAD Jul-13 Jul-14 Jul-15 Jul-16 GBP 1M implied vol Jul-13 Apr-14 Jan-15 Oct-15 Jul-16 NZD 1M implied vol Jul-13 Apr-14 Jan-15 Oct-15 Jul-16 CAD 1M implied vol This commentary reflects the views of the Wealth Management Group of Standard Chartered Bank. 16

17 Consensus forecasts Consensus Forecasts Spot Q Q Q Q EUR/USD USD/JPY AUD/USD NZD/USD USD/SGD GBP/USD USD/CAD USD/CHF This commentary reflects the views of the Wealth Management Group of Standard Chartered Bank. 17

18 TECHNICAL INDICATORS EXPLANATORY APPENDIX RSI (Relative Strength Index) The RSI indicators can be used to describe the speed at which prices move over a given time period. An RSI above 70 can indicate a currency pair is overbought while an RSI below 30 can indicate the pair is oversold. Stochastic Oscillator The Stochastic Oscillator compares where a security's price closed relative to its trading range over a given time period. The security or index is generally considered oversold when the Oscillator falls to 20, while a reading of 80 is considered overbought. MACD (The Moving Average Convergence/Divergence) This indicator shows the relationship between two moving averages of prices. A bearish signal is provided when the main moving average line drops below the second moving average line, and vice versa. ADX (Average Directional Index) This indicator quantifies a trend's strength regardless of whether it is up or down. An index rising above zero provides a bullish signal while an index falling below zero provides a bearish signal. Momentum Indicator The momentum of a security is the ratio of today's price compared to the price at a given point in the past. If the security's price is higher today, the momentum indicator will be considered strong. If the security's price is lower today, the momentum Indicator will be weak. This commentary reflects the views of the Wealth Management Group of Standard Chartered Bank. 18

19 Disclosure Appendix This document is not research material and it has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. This document does not necessarily represent the views of every function within Standard Chartered Bank, ( SCB ) particularly those of the Global Research function. Standard Chartered Bank is incorporated in England with limited liability by Royal Charter 1853 Reference Number ZC18. The Principal Office of the Company is situated in England at 1 Basinghall Avenue, London, EC2V 5DD Standard Chartered Bank is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and Prudential Regulation Authority. United Kingdom: Standard Chartered Bank (trading as Standard Chartered Private Bank) is an authorised financial services provider (licence number 45747) in terms of the South African Financial Advisory and Intermediary Services Act, 2002 In Dubai International Financial Centre ( DIFC ), the attached material is circulated by Standard Chartered Bank DIFC on behalf of the product and/or Issuer. Standard Chartered Bank DIFC is regulated by the Dubai Financial Services Authority (DFSA) and is authorised to provide financial products and services to persons who meet the qualifying criteria of a Professional Client under the DFSA rules. The protection and compensation rights that may generally be available to retail customers in the DIFC or other jurisdictions will not be afforded to Professional Clients in the DIFC. Banking activities may be carried out internationally by different Standard Chartered Bank branches, subsidiaries and affiliates (collectively SCB ) according to local regulatory requirements. With respect to any jurisdiction in which there is a SCB entity, this document is distributed in such jurisdiction by, and is attributable to, such local SCB entity. Recipients in any jurisdiction should contact the local SCB entity in relation to any matters arising from, or in connection with, this document. Not all products and services are provided by all SCB entities. This document is being distributed for general information only and it does not constitute an offer, recommendation or solicitation to enter into any transaction or adopt any hedging, trading or investment strategy, in relation to any securities or other financial instruments. This document is for general evaluation only, it does not take into account the specific investment objectives, financial situation or particular needs of any particular person or class of persons and it has not been prepared for any particular person or class of persons. Opinions, projections and estimates are solely those of SCB at the date of this document and subject to change without notice. Past performance is not indicative of future results and no representation or warranty is made regarding future performance. Any forecast contained herein as to likely future movements in rates or prices or likely future events or occurrences constitutes an opinion only and is not indicative of actual future movements in rates or prices or actual future events or occurrences (as the case may be). This document has not and will not be registered as a prospectus in any jurisdiction and it is not authorised by any regulatory authority under any regulations. 19

20 SCB makes no representation or warranty of any kind, express, implied or statutory regarding, but not limited to, the accuracy of this document or the completeness of any information contained or referred to in this document. This document is distributed on the express understanding that, whilst the information in it is believed to be reliable, it has not been independently verified by us. SCB accepts no liability and will not be liable for any loss or damage arising directly or indirectly (including special, incidental or consequential loss or damage) from your use of this document, howsoever arising, and including any loss, damage or expense arising from, but not limited to, any defect, error, imperfection, fault, mistake or inaccuracy with this document, its contents or associated services, or due to any unavailability of the document or any part thereof or any contents. SCB, and/or a connected company, may at any time, to the extent permitted by applicable law and/or regulation, be long or short any securities, currencies or financial instruments referred to on this document or have a material interest in any such securities or related investment, or may be the only market maker in relation to such investments, or provide, or have provided advice, investment banking or other services, to issuers of such investments. Accordingly, SCB, its affiliates and/or subsidiaries may have a conflict of interest that could affect the objectivity of this document. This document must not be forwarded or otherwise made available to any other person without the express written consent of SCB. Copyright: Standard Chartered Bank Copyright in all materials, text, articles and information contained herein is the property of, and may only be reproduced with permission of an authorised signatory of, Standard Chartered Bank. Copyright in materials created by third parties and the rights under copyright of such parties are hereby acknowledged. Copyright in all other materials not belonging to third parties and copyright in these materials as a compilation vests and shall remain at all times copyright of Standard Chartered Bank and should not be reproduced or used except for business purposes on behalf of Standard Chartered Bank or save with the express prior written consent of an authorised signatory of Standard Chartered Bank. All rights reserved. Standard Chartered Bank THIS IS NOT A RESEARCH REPORT AND HAS NOT BEEN PRODUCED BY A RESEARCH UNIT. 20

fx strategy Has the USD bear trend finally started? fx 3 May 2016 This reflects the views of the Wealth Management Group

fx strategy Has the USD bear trend finally started? fx 3 May 2016 This reflects the views of the Wealth Management Group fx strategy fx 3 May 2016 This reflects the views of the Wealth Management Group Has the USD bear trend finally started? Technically, the USD (DXY index) is now below its August low, suggesting a possible