EUR-USD USD-JPY AUD-USD USD-SGD GBP-USD XAU-USD Spot Support

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1 FX STRATEGY 0 December 0 The comments represented in this publication are made on the basis of a week outlook Contents EUR USD Pg USD JPY Pg AUD USD Pg USD SGD Pg 5 GBP USD Pg 6 XAU USD Pg 7 Interest rate differentials and FX implied Pg 8 volatility Central Bank Monetary Policy Schedule Pg 9 Appendix Pg 0 Disclaimer Pg On to the US Fed and fiscal cliff The Fed s decision on compensating for Operation Twist (OT), which expires by year end, and uncertainty over the US fiscal cliff debate are key factors influencing currencies Asian currencies remained resilient over the last week. We reiterate our conviction on Asian currencies on a month basis, albeit with a likelihood of a temporary correction in the interim EUR-USD We remain neutral on EUR-USD and seek further conviction from technical before taking a directional view on the pair Asia ex-japan currencies still resilient DXY and Y Indices 8 8 Index Index USD-JPY We remain bullish on USD-JPY as price patterns and technical suggest the current rally is still incomplete AUD-USD We remain neutral on AUD-USD as most technical remain neutral. The pair is expected to trade within a range 7 Oct- Jan- Apr- Jul- Oct- DXY Index Y Index (RHS) Note: DXY Index comprises of the weighted performance of the USD against the EUR, JPY, GBP, CAD, SEK and CHF. Y Index comprises of the weighted performance of the CNY, HKD, INR, IDR, KRW, MYR, PHP, SGD, TWD and THB against the USD. Suren Chelliah Investment Strategist USD-SGD We remain bearish on USD-SGD as technical continue to project further downside GBP-USD** We remain bullish on GBP-USD given ive momentum and price patterns. A retest of the previous high of.6 is likely Steve Brice Rob Aspin, CFA Manpreet Gill Victor Teo Chief Investment Strategist Head, Equity Investment Strategy Head, FICC Investment Strategy Investment Strategist XAU-USD** We remain neutral on XAU-USD as technical remain divergent. The 700 level is key This will be the last FX Strategy publication for 0. The publication will resume on 7 Jan 0 **Going forward, we will maintain the EUR, JPY, AUD and SGD outlook while rotating the others based on relevance. Technicals Short term Spot (- weeks) Support Support Resistance Resistance EUR-USD USD-JPY AUD-USD USD-SGD GBP-USD XAU-USD This commentary reflects the views of the Wealth Management Group of Standard Chartered Bank.

2 EUR - USD We remain neutral on EUR-USD and seek further conviction from technical before taking a directional view on the pair Stochastic.0. Strong Spot.9.8 Strong.70 Weak Q Q Q Q EUR-USD declined marginally (-0.5%) last week on uncertainty over the Greek bond buy back results and concerns of weaker growth in 0. The ECB revised down the Euro area s growth forecast for 0. Technical analysis Major technical are divergent. The reversal from the highs of. has retraced exactly 50% of the current rally. The pair is likely to consolidate at current levels as long as.8 holds We prefer to stay neutral and look for greater conviction from a wider range of technical before taking a directional view on the pair. We would review our outlook if we get a weekly close below.8 or above.. Key signposts The developments surrounding the debt crisis remain the primary concern in the Euro area. The success of the Greek bond buyback program and political instability in Italy are key short term risks. Further weakness in the Germany s trade balance data (Dec 0), Germany s ZEW sentiment survey (Dec ), Euro area industrial production data (Dec ), Euro area unemployment rate (Dec ) or Germany s IFO economic sentiments data (Dec 9) would likely be bearish for the Euro area. *Please see Appendix on Pg 0 for explanation on technical Tight range trading continues Technical Analysis: EUR-USD dma 00 dma 00 dma EUR - USD Oct- Jan- Apr- Jul- Oct- EUR-USD 50 dma 00 dma 00 dma

3 USD - JPY We remain bullish on USD-JPY as price patterns and technical suggest the current rally is still incomplete Stochastics USD-JPY was unchanged last week (+0.0%) given uncertainty over the outcome of the Bank of Japan s (BoJ) next monetary policy decision on Dec Strong 8.50 Spot Strong Strong Technical Analysis Major technical are, on balance, bullish. The pair ended flat last week, after technical highlighted short term overbought conditions. Price patterns suggest that the rally is still incomplete. As such, we expect the pair to rise towards initial primary at 8.50 with being key strong. We would review our outlook if we get a weekly close below Key signposts Prior to the general election date on Dec 6, Japan s GDP data (Dec 0), machine orders (Dec ) and the Tankan manufacturing outlook survey (Dec ) are key. These will likely be key input for the BoJ s meeting on Dec 0. Q Q Q Q *Please see Appendix on Pg 0 for explanation on technical USD-JPY awaiting Dec 6 elections and BoJ meeting on Dec 0 Technical Analysis: USD-JPY USD - JPY dma 00 dma 00 dma Oct- Jan- Apr- Jul- Oct- USD-JPY 50 dma 00 dma 00 dma

4 AUD - USD Stochastic.08 Strong.060 Strong Spot Strong Q Q We remain neutral on AUD-USD as technical remain neutral. The pair is expected to trade within a larger sideways band between.06 and.0 AUD-USD rose marginally (+0.58%) over the last week on expectations the Reserve Bank of Australia (RBA) may have ended its monetary easing cycle. The RBA cut its benchmark interest rate by 5bps on Dec. Australia s unemployment data was also more positive than market expectations. Technical Analysis Major technical are, on balance, neutral. We maintain our neutral view as most technical remain neutral. We expect the pair to continue trading within a.0.06 range. We would review our outlook if the pair ends the week above.06 or below.05. Key signposts Australia s private sector credit growth (Dec ) is a key data point in assessing the effectiveness of past policy rate cuts. A further decline in the data is likely to pressure the RBA to cut its benchmark rate which would likely be bearish for AUD-USD. Q Q *Please see Appendix on Pg 0 for explanation on technical AUD-USD likely to continue sideways trading Technical Analysis: AUD-USD AUD - USD dma 00 dma 00 dma Oct- Jan- Apr- Jul- Oct- AUD-USD 50 dma 00 dma 00 dma

5 USD - SGD We remain bearish on USD-SGD as technical continue to project further downside Stochastic USD-SGD was broadly unchanged (+0.06%) over the last week as Singapore s Electronics Sector Index and Purchasing Managers Index were generally mixed.. Strong. Strong Spot..5.0 Strong Technical Analysis Major technical, on balance, are neutral to bearish. Technical suggest continued downside albeit after brief consolidation around current levels. The broader downward trend remains in place. We would review our outlook if the pair ends the week above.. Key signposts Any weakness in Singapore s exports growth data (Dec 7) or industrial production index (Dec 6) is likely to push the pair higher. Singapore s inflation data (Dec ) is key. If inflation remains elevated, the pair will likely weaken. Q 0.. Q 0.. Q 0..0 Q *Please see Appendix on Pg 0 for explanation on technical USD-SGD: Struggling to stay over. Technical Analysis: USD-SGD dma 00 dma 00 dma...78 USD - SGD Oct- Jan- Apr- Jul- Oct- USD-SGD 50 dma 00 dma 00 dma 5

6 GBP - USD Stochastic We remain bullish on GBP-USD given ive momentum and price patterns. A retest of the previous high of.6 is likely GBP-USD rose marginally (+0.6%) over the last week after the Bank of England (BoE) left its key benchmark rate unchanged at 0.5% and left its current asset purchase program target at GBP75 billion..60 Strong.67 Spot Strong Technical Analysis Major technical are, on balance, neutral to bullish. Supportive momentum and price patterns continue to our bullish stance. We would review our outlook if we get a weekly close below.59. Key signposts Inflation data (Dec 8) and the BoE minutes (Dec 9) from the last monetary policy meeting will be key for the next monetary policy decision. Q Q Q Q *Please see Appendix on Pg 0 for explanation on technical GBP-USD: A retest of.6 is likely Technical Analysis: GBP-USD GBP - USD dma 00 dma 00 dma Oct- Jan- Apr- Jul- Oct- GBP-USD 50 dma 00 dma 00 dma 6

7 XAU - USD Stochastic We remain neutral on XAU-USD as technical remain divergent. The 700 level is key XAU-USD fell marginally (-0.6%) over the last week. Gold rebounded after falling below the key 700 level on expectations the US Fed will likely implement new measures to replace Operation Twist by year end. 766 Strong 76 Spot Weak 668 Strong Q Q Q Q na Technical Analysis Major technical are divergent. We stay neutral on the pair given divergent technical. The 700 level is a key swing level i.e. a sustained position above 700 will likely be bullish for gold while a position below 700 will likely be bearish for gold. Although short term risks to the downside have grown, longer term price patterns remain bullish. We would review our outlook if the pair ends the week above 76 or below 68. Key signpost Monitoring inflation expectations remains key in gauging the sustainability of the rise in gold prices. We reiterate the long term drivers (i.e. purchases by central banks, debasement of currencies, etc) for higher gold prices remain intact. The US Fed decision on replacing Operation Twist is also key. Expanded MBS or bond purchases will likely be bullish for gold. *Please see Appendix on Pg 0 for explanation on technical US Fed decision on Dec is key Technical Analysis: XAU-USD XAU-USD,850.00,800.00,750.00,700.00,650.00,600.00, dma 00 dma 00 dma , Oct- Jan- Apr- Jul- Oct- XAU-USD 50 dma 00 dma 00 dma 7

8 EUR-USD % 0 - Interest rate differentials Measures the yield of holding a foreign currency relative to the base currency - Apr-07 Apr-08 Apr-09 Apr-0 Apr- Apr- mth EUR LIBOR less mth USD LIBOR EUR-USD (RHS) EUR-USD FX Implied Volatility An approximate indicator used to gauge future expectations of price movements based on FX options market pricing 6 Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- W Implied Volatility USD-JPY 5 % 0 - Apr-07 Apr-08 Apr-09 Apr-0 Apr- Apr- mth USD LIBOR less mth JPY LIBOR USD-JPY (RHS) USD-JPY Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- W Implied Volatility AUD-USD 6 5 % 0 Apr-07 Apr-08 Apr-09 Apr-0 Apr- Apr- mth AUD LIBOR less mth USD LIBOR AUD-USD (RHS) AUD-USD Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- W Implied Volatility USD-SGD % 0 - Apr-07 Apr-08 Apr-09 Apr-0 Apr- Apr- mth USD LIBOR less mth SGD SIBOR USD-SGD (RHS) USD-SGD Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- W Implied Volatility GBP-USD % Apr-07 Apr-08 Apr-09 Apr-0 Apr- Apr- mth GBP LIBOR less mth USD LIBOR GBP-USD (RHS) GBP-USD Jan- Apr- Jul- Oct- Jan- Apr- Jul- Oct- W Implied Volatility 8

9 Central Bank Monetary Policy Meeting Schedules 0* FX Strategy Policy rate** Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Majors US UK Euro area Japan 0.0 0, ,0 0 0 Australia New Zealand Canada Switzerland Asia ex-japan China 6.00 India 8.00 South Korea Taiwan Singapore Expected Malaysia Indonesia Thailand Philippines * Subject to change ** Data as of Dec 0

10 EXPLANATORY APPENDIX (Relative Strength Index) The can be used to describe the speed at which prices move over a given time period. An above 70 can indicate a currency pair is overbought while an below 0 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 0%, while a reading of 80% is considered overbought. (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. (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. 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.

11 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 represent the views of Standard Chartered Bank, particularly those of the Global Research function. Standard Chartered Bank is incorporated in England and Wales with limited liability by Royal Charter 85, Reference number ZC 8. The Principal Office of the Company is situated in England at Aldermanbury Square London ECV 7SB. Standard Chartered Bank is authorised and regulated by the Financial Services Authority under FSA register number 76. In Dubai International Financial Centre ( DIFC ), the attached material is circulated by Standard Chartered Bank DIFC on behalf of the product and/or Issuer. 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EUR-USD USD-JPY AUD-USD USD-SGD GBP-USD XAU-USD Spot Support

EUR-USD USD-JPY AUD-USD USD-SGD GBP-USD** XAU-USD** Spot Support FX STRATEGY 7 January 03 The comments represented in this publication are made on the basis of a week outlook Contents EUR USD Pg USD JPY Pg 3 AUD USD Pg USD SGD Pg 5 GBP USD Pg 6 XAU USD Pg 7 Interest