Foreign exchange overview Foreign exchange - Key points Preferences (6 months) ¢ The ECB’s announcement of Outright Monetary Transactions (OMT) has reduced tail risk in the Eurozone Cnglerinigitt neutral SvEnWeIght considerably, while the Federal Reserve announcing a new round of potentially unlimited asset purchases uED at their September 13 meeting has weakened the USD. Given that the ECB action was EUR-positive and the Fed action USD-negative, EURUSD has jumped considerably, but since then moved little. EUR ¢ We believe the risks to the pair are now more balanced, and see a range between EURUSD 1.28-1.35 for the months ahead. A Spanish ESM/OMT request would be EUR positive. While the US elections and US GBP fiscal cliff could lead to short term USD strength, we see the USD weaker over the next 6 months. JPY ¢ The CAD remains supported by better growth dynamics in Canada and QE in the US. However, we believe the recent appreciation against the USD could see a near-term setback and we close the overweight. SHR ¢ We keep the overweight position in the GBP despite the current asset purchasing program by the Bank of SEK England (BoE), which we believe will be terminated in November. The GBP remains well supported given the recent rebound in economic data, the expectation of a stronger economy in 2013 and because NOK investors are seeking liquid alternatives to the EUR, the USD and the JPY. _— ¢ EURCHF has traded higher in our 1.20-1.23 range recently and we continue to see the pair in that range. The SNB protects the downside, while a strong upside move is also limited by a potential flare-up in the NzD euro crisis and reserve unwinding of the SNB at some point. Given this balance, we have decided to close the underweight in the CHF. AUD ¢ Sweden and Norway stand out for their lower debt-to-GDP ratios and current account surpluses. Both the — old SEK and NOK have appreciated on diversification and safe-haven inflows, but economic data in both countries has become weak