FX DAILY REPORT

MONDAY 15TH AUGUST 2011

Bell FX Currency Outlook

The AUD is stronger this morning currently trading at USD1.0380 as offshore equity markets finished stronger and markets stabilised after the tumultuous week. Australia: Risk was back on the table as the global markets seemed to gain some stability towards the end of the week; therefore the AUD has risen almost one cent since Friday on the back of renewed demand. The positive news out of Europe, including the approval of Italys austerity budget managed to overshadow the somewhat mixed data out of the US. While US retail sales data was positive; meeting markets expectations of a 0.5% gain, the US consumer sentiment plunged to a 31 year low, leaving investors with little to go on. The Michigan Consumer Confidence fell from 63.7 to 54.9, which was much more severe than the expected drop to 62.The movements in the equity markets in the past week can explain some of the decrease; although should the index not recover next month, then it could leave investors very concerned for the recovery of the US economy. Tonight in the US sees the release of manufacturing data for August. Many will be paying close attention to the result given the recent fluctuating manufacturing results in the region. Locally we have new motor vehicle sales for July released; with the tier two data unlikely to influence the market. However, the Japanese Q2 GDP will be of more interest with markets expecting a 2.5% drop. Majors: Most of the news offshore was in relation to the recent rise of the Swiss Franc. Speculation is rife that Switzerlands central bank will take further measures to weaken the CHF; and this dragged the recent safehaven currency lower. The CHF fell more than 2% during the trading session against both the USD and the EUR. This was surprising as most of the movement out of the currency was purely based on speculation rather than any formal statement by the central bank. Many were going on the behaviour in the last week by the Swiss National Bank as they trimmed rates close to zero and flooded the Swiss money markets with liquidity to make the CHF less attractive to global investors. As mentioned above, the Italian Cabinet approved the austerity budget, which included more than EUR45.5bio in cuts to the balance sheet. A budget of this type is an attempt to show investors that they are undertaking all avenues to avoid any further sovereign debt issues. Other data out of Europe disappointed, with the regions industrial production falling 0.7%.

Australian Dollar / US Dollar

1.20 1.10 1.00 0.90 0.80 0.70 0.60
Oct-05 Oct-06 Oct-07 Oct-08 Oct-09 Oct-10 Oct-11

Todays Forecast Range

USD 1.0275 - 1.0475

Currencies AUD / USD USD / JPY EUR / USD GBP / USD NZD / USD AUD Crosses AUD / JPY AUD / EUR AUD / GBP AUD / NZD AUD / CAD Australian Rates Official Cash 3 Month Bill 10 Year Bond US Rates Fed Funds 3 Month Libor Last 1.0390 76.88 1.4275 1.6291 0.8355 Last 79.92 0.7276 0.6375 1.2439 1.0270 Last 4.75 4.83 4.43 Last 0.25 0.290 2.25 Last 1740.20 85.38 326.53 Last 4173 11269 5320 19620 8964 0.275 2.32 - / + (%) -0.5 -0.4 0.1 - / + (%) 0.8 1.1 3.0 0.1 -0.2 4.88 4.46 Previous High 1.0395 77.02 1.4294 1.6313 0.8358 High 80.11 0.799 0.6382 1.2255 1.0275 Previous Low 1.0171 76.51 1.4104 1.6133 0.8128 Low 78.70 0.7185 0.6325 1.2366 1.0166

Economic Calendar 15 AUG

10 Year Bond AU New Motor Vehicle Sales JUL JN GDP Q2 US Empire Manufacturing AUG US Feds Lockhart Speaks on economy in Alabama Commodities Gold (US$ / oz) Oil (WTI) US$/bbl) CRB Index

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