Foreign Exchange Outlook - ScotiaFX

Global Economics & Foreign Exchange Strategy July 2013 Foreign Exchange Outlook The USD will continue to appreciate vs. core advanced and emerging-market currencies throughout the second half of the year. The CAD will be affected by a move towards the USD. Re-dollarization and repatriation dynamics fueled by Fed policy shifts and commodity price softness will keep floating Latin American currencies on the defensive. The EUR will be immersed in a gradual depreciation phase as a result of poor growth dynamics and relative monetary policy. GBP gains will be short-lived while the CHF remains subject to a quasi-fixed regime. The RUB, TRY and ZAR will continue to test low levels. The Asian currency outlook will be mixed with fierce central bank

intervention in Japan and China and persistently weak INR sentiment. Further CNY appreciation will be limited. The risk of regional competitive alignments are resurfacing. The AUD will remain in correction mode through the end of the year. Forecast Highlights s a USD USD is poised to strengthen broadly into year-end. c i r e CAD Near term weakness is likely to persist, stabilizing into year-end. m A MXN MXN likely to strengthen modestly from current levels by year-end. / c i f CNY Further gains from here are limited; particularly with Shibor elevated. a i i c s a A P JPY BoJ policy to weigh on yen; expect a year-end close of 105. EUR Poised for weakness as flows weaken and USD is strong. e p o r GBP Expected to come under downside pressure on growth, a strong USD & the BoE. u E CHF SNB expected to adhere to the EURCHF 1.20 floor. Market Tone & Fundamental Outlook……………………………………………..………………….… 3 US & Canada…………………………...……………………………………………………..………… 5 Europe……………………………………………………………………………………………………. 6 f s t o Asia / Pacific...………………………………………………………...…...…………………………… 8 n e e l t b Developing Asia………………………………………………………………………………………… 10 n a o T C Developing Americas……………………………………………………………………...…………… 12 Developing Europe & Africas...………………………...…………………………...………………… 14 FX Forecast...……………………………………………………..………………………………..….. 16 Contacts & Contributors...………………………………..…………………………..……………….. 17 Foreign Exchange Outlook is available on: www.scotiabank.com, www.scotiafx.com & Bloomberg at SCOT Global Economics & Foreign Exchange Strategy July 2013 Foreign Exchange Outlook C ORE E XCHANGE R ATES Global Foreign Exchange Outlook June 27, 2013 Spot Q1a 13 Q2e 13 Q3f 13 Q4f 13 Q1f 14 Q2f 14 Q3f 14 Q4f 14 S cotiabank 1.30 1.28 1.30 1.26 1.25 1.25 1.24 1.24 1.23 EURUSD Consensus* 1.31 1.28 1.28 1.26 1.26 1.26 1.26 S cotiabank 98.4 94 98 104 105 106 107 109 110 USDJPY Consensus* 100 103 103 104 105 105 105 S cotiabank 1.52 1.52 1.52 1.47 1.45 1.45 1.45 1.44 1.44 GBPUSD Consensus* 1.54 1.49 1.49 1.49 1.49 1.49 1.50 S cotiabank 1.05 1.02 1.05 1.07 1.06 1.05 1.04 1.02 1.01 USDCAD Consensus* 1.02 1.02 1.02 1.02 1.03 1.03 1.03 S cotiabank 0.93 1.04 0.93 0.92 0.90 0.90 0.91 0.92 0.93 AUDUSD Consensus* 0.95 0.97 0.96 0.95 0.94 0.94 0.93 S cotiabank 13.05 12.33 13.05 12.61 12.61 12.67 12.54 12.60 12.76 USDMXN Consensus* 12.68 12.20 12.16 12.12 12.08 12.13 12.19 115 1.62 EURUSD 107 USDJPY 1.52 1.42 99 1.32 91 1.22 83 1.12 75 2.11 1.30 USDCAD 1.96 GBPUSD 1.22 1.81 1.14...

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