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					 Absolute FX                                                                                                                                                                     absolute FX
  Absolute FX
 Currency View – Sept’09
     Currency View – May ‘08




                         Note: The information contained in this document is strictly confidential and is for internal use only. It is protected by copyright and may not be
transmitted or transferred to anyone other than the intended party. Past performance is not indicative of future results. For further information please visit our website at www.absolute-am.com   1
                                                                                                                                                                                 absolute FX
                                                                                                                    AUD-SHORT TERM VIEW
                                                                                                                    AUD has again broken to new highs for this trend
                                                                                                                    It is becoming overbought in the short term
                                                                                                                    But a fall back below $0.8150 is required to question
                                                                                                                    the upside potential
                                                                                                                    Our next short term upside target is $0.9000



  AUD-MEDIUM TERM VIEW
  Rising commodity prices & a strong internal economy
  are the key drivers of the upward trend
  The interest rate differential to the US will increase
  further over the coming months as Aust rates rise
  Gains may be becoming a bit overheated

  But the AUD still has further upside towards the 2008
  highs at least
                         Note: The information contained in this document is strictly confidential and is for internal use only. It is protected by copyright and may not be
transmitted or transferred to anyone other than the intended party. Past performance is not indicative of future results. For further information please visit our website at www.absolute-am.com   2
                                                                                                                                                                                 absolute FX
                                                                                                                    AUD/GBP
                                                                                                                    AUD is trading at multi year highs vs GBP
                                                                                                                    It is becoming over bought in the short term

                                                                                                                    But the trend is supported by strong fundamentals for
                                                                                                                    the AUD
                                                                                                                    Similarly GBP is being undermined by weak
                                                                                                                    fundamentals & Quantitative Easing
                                                                                                                    AUD has further upside potential in the medium term
  AUD/EUR
  AUD is still in recovery mode against the EUR
  Gains have been more muted than against GBP
  AUD fundamentals are superior to the EUR
  EUR will be firm as the alternate reserve currency to
  the USD but the AUD will be stronger
  A recovery back towards the 2007 highs should
  continue

                         Note: The information contained in this document is strictly confidential and is for internal use only. It is protected by copyright and may not be
transmitted or transferred to anyone other than the intended party. Past performance is not indicative of future results. For further information please visit our website at www.absolute-am.com   3
                                                                                                                                                                                 absolute FX
                                                                                                                    AUD/JPY
                                                                                                                    AUD is in an upward trend against JPY
                                                                                                                    But the trend has stalled as the JPY has also been
                                                                                                                    rising against the USD

                                                                                                                    The fundamentals do not support a strong JPY in the
                                                                                                                    medium term

                                                                                                                    We look for the AUD to rise back above 90 JPY


  AUD/SGD
  AUD is a higher beta currency than the SGD
  The MAS still has a bias towards a weak SGD for the
  time being
  That will be removed as a recovery takes hold
  But the AUD will be stronger in the medium term
  The current trend will carry the AUD back towards
  the late 2007 highs

                         Note: The information contained in this document is strictly confidential and is for internal use only. It is protected by copyright and may not be
transmitted or transferred to anyone other than the intended party. Past performance is not indicative of future results. For further information please visit our website at www.absolute-am.com   4
                                                                                                                                                                                 absolute FX
                                                                                                                    GBP-SHORT TERM VIEW
                                                                                                                    GBP’s failure to hold above 1.70 is significant
                                                                                                                    It has capped the rally for now
                                                                                                                    For GBP to have upside potential it must clear 1.70 but
                                                                                                                    that appears unlikely
                                                                                                                    A fall below 1.60 would indicate that sentiment towards
                                                                                                                    GBP is turning negative


  GBP-MEDIUM TERM VIEW
  GBP has stalled against the USD despite the USD being
  weak against most other currencies
  GBP is being undermined by “QE” & the poor UK
  fundamentals – any recovery could lag others
  GBP & USD look equally negative so GBP may hold
  ground against the USD

   But GBP will be weak against most other currencies
                         Note: The information contained in this document is strictly confidential and is for internal use only. It is protected by copyright and may not be
transmitted or transferred to anyone other than the intended party. Past performance is not indicative of future results. For further information please visit our website at www.absolute-am.com   5
                                                                                                                                                                                 absolute FX
                                                                                                                    GBP/EUR
                                                                                                                    GBP is under pressure against the EUR
                                                                                                                    The recovery from the 2009 lows appears to be over

                                                                                                                    GBP fundamentals are likely to remain negative & EUR
                                                                                                                    will gain on status as the alternate reserve currency
                                                                                                                    A fall back towards parity at least is likely in the medium
                                                                                                                    term


  GBP/JPY
  GBP also appears to have peaked against the JPY
  There is some risk of a fall back towards 120
  But Japan fundamentals do not support a strong JPY
  As a result downside for GBP should be more limited
  against the JPY




                         Note: The information contained in this document is strictly confidential and is for internal use only. It is protected by copyright and may not be
transmitted or transferred to anyone other than the intended party. Past performance is not indicative of future results. For further information please visit our website at www.absolute-am.com   6
                                                                                                                                                                                 absolute FX
                                                                                                                    GBP/SGD
                                                                                                                    The SGD is unlikely to be strongest currency as the
                                                                                                                    MAS maintains it weakening bias
                                                                                                                    As a result GBP has limited downside for now
                                                                                                                    But medium term the SGD & Asian currencies will be
                                                                                                                    among the strongest supported by higher growth &
                                                                                                                    lower debt
                                                                                                                    A fall in GBP below SGD2 is likely

  GBP/BRL
  GBP long term trend against the BRL is an indication
  of what lies ahead
  Risk aversion during the GFC saw GBP spike
  against EM currencies including the BRL
  But longer term we see EM currencies continuing the
  trend against developed market currencies
  A fall to new lows in GBP look inevitable

                         Note: The information contained in this document is strictly confidential and is for internal use only. It is protected by copyright and may not be
transmitted or transferred to anyone other than the intended party. Past performance is not indicative of future results. For further information please visit our website at www.absolute-am.com   7
                                                                                                                                                                                 absolute FX
                                                                                                                    EUR-SHORT TERM VIEW
                                                                                                                    EUR is in a clear upward trend against the USD
                                                                                                                    The fall in USD/rise in EUR is looking a bit hot in the
                                                                                                                    short term

                                                                                                                    But with liquidity unlikely to be removed from the US
                                                                                                                    soon the currency will continue to be debased
                                                                                                                    A fall back below 1.40 would be required to suggest the
                                                                                                                    EUR has peaked
  EUR-MEDIUM TERM VIEW
  EUR has reached its highest level since Sept’08 against
  the USD
  But this is primarily USD weakness
  USD has become the favourite funding currency for the
  carry trade against the AUD, NZD etc

  But we expect the EUR to continue to gain against a
  weak USD in the medium term with 1.60 the target

                         Note: The information contained in this document is strictly confidential and is for internal use only. It is protected by copyright and may not be
transmitted or transferred to anyone other than the intended party. Past performance is not indicative of future results. For further information please visit our website at www.absolute-am.com   8
                                                                                                                                                                                 absolute FX
                                                                                                                    EUR/CHF
                                                                                                                    EUR has been relatively stable against the CHF
                                                                                                                    This is evidence that the rising EUR against the USD is
                                                                                                                    not due to EUR strength
                                                                                                                    The Swiss have shown a preference for a weaker
                                                                                                                    currency recently
                                                                                                                    As a result some upside in the EUR is possible but it will
                                                                                                                    be moderate

  EUR/SGD
  SGD is not keeping pace with the EUR as a result
  the EUR is rising
  Further gains in EUR are possible while the SGD
  economy remains weak
  But longer term we see Asian currencies being
  among the strongest
  Gains in the EUR above the 2008 highs would be
  unlikely as a result
                         Note: The information contained in this document is strictly confidential and is for internal use only. It is protected by copyright and may not be
transmitted or transferred to anyone other than the intended party. Past performance is not indicative of future results. For further information please visit our website at www.absolute-am.com   9
                                                                                                                                                                                 absolute FX
                                                                                                                    CNY
                                                                                                                    The CNY remains pegged to the USD but a return to a
                                                                                                                    gradual appreciation will return in the short term
                                                                                                                    China will find it difficult to control its money supply &
                                                                                                                    economy with a pegged currency
                                                                                                                    Therefore in the medium term a dirty float followed by a
                                                                                                                    full float is inevitable

                                                                                                                    CNY will be strongest currency globally when occurs

  INR
  INR has recovered some ground against the USD
  But the gains are relatively small relative to the
  weakness of the USD against other currencies
  To some degree that reflects INR fundamentals
  But we remain bullish on India longer term

  As a result the INR is looking over undervalued

                         Note: The information contained in this document is strictly confidential and is for internal use only. It is protected by copyright and may not be
transmitted or transferred to anyone other than the intended party. Past performance is not indicative of future results. For further information please visit our website at www.absolute-am.com   10
                                                                                                                                                                                 absolute FX
                                                                                                                    IDR
                                                                                                                    The IDR has been among the strongest currencies
                                                                                                                    against the USD
                                                                                                                    Indonesia’s stock market is also among the best globally
                                                                                                                    Indonesia’s lack of export dependence meant the
                                                                                                                    economy was less impacted by the GFC
                                                                                                                    But continued strength in the IDR beyond 9000 is not
                                                                                                                    sustainable – the Government will probably manage the
                                                                                                                    currency at that level as they did in 2006-2008
  KRW
  The KRW continues to recover following the plunge
  in 2008/09
  The economy is export driven but this is increasingly
  China focused
  The Government will not want the KRW to return to
  the 2007 levels quickly
  But KRW remains one of our favourite currency picks

                         Note: The information contained in this document is strictly confidential and is for internal use only. It is protected by copyright and may not be
transmitted or transferred to anyone other than the intended party. Past performance is not indicative of future results. For further information please visit our website at www.absolute-am.com   11
                                                                                                                                                                                 absolute FX
                                      GENERAL ADVICE WARNING
                 So far as the law allows, the author disclaims any warranty or
                 representations to the accuracy or reliability of the information and
                 statements in this document. The author expressly advise that it shall not
                 be liable in any way whatsoever (whether negligence or otherwise) for
                 any loss or damage which may be suffered by any person relying upon
                 such information or conclusions contained in this document or otherwise
                 arising in connection with the contents of or any omission from this
                 document except where a liability is made non-excludable by legislation.
                 This document does not purport to contain all relevant information and
                 any statement as to any future matter is a present prediction of possible
                 future outcome the accuracy of which cannot be guaranteed. The author
                 has not knowledge of the readers specific investment requirements and
                 therefore recipients should not rely upon the contents of this document
                 but should make their own assessment and evaluation, undertake an
                 investigation and enquires and seek advice to enable them to make any
                 decision concerning their own risk.


                         Note: The information contained in this document is strictly confidential and is for internal use only. It is protected by copyright and may not be
transmitted or transferred to anyone other than the intended party. Past performance is not indicative of future results. For further information please visit our website at www.absolute-am.com   12

				
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