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For important disclosure information please refer to the back pages

EUR-USD: After hours of debate the Speaker of the US House of Representatives John

Boehner (Republican) cancelled the vote on his savings programme which had been planned

for yesterday. It remains unclear whether it was just postponed again or cancelled completely.

Boehners Plan not only met opposition from the Democrats but also from within his own ranks.

However, getting the proposal through the House of Representatives would have been only the

first hurdle, anyway. The Senate, which is dominated by the Democrats, would probably have

rejected the proposals. The developments illustrated once again that there is not just dis-agreement between the parties but that the Republicans also seem to be hopelessly divided.

Doubts as to how an agreement can be reached in time are likely to rising. Yesterdays letter by

the largest US financial institutions asking the politicians to come to an agreement illustrates

just how nervous the financial world is.

Despite the situation coming to a head the euro has been unable to benefit against the US

dollar easing below the 1.43 mark temporarily yesterday. Markets are waiting for further details

regarding the agreement reached at the EU summit last week. Moreover the countries still have

to vote on an increase of the EFSF funds and its extended responsibilities. The measures are

fire fighting in one spot without putting out the flames completely. The danger of contagion

does not seem to have been overcome as the rising spreads of Spanish and Italian bonds

illustrate.

On the data front the first estimate of Q2 GDP data in the US is due today. We expect weak

growth at an annualised 1.5%. In addition to the debt problem we might see economic con-

cerns putting pressure on the dollar. The reaction is however likely to be more pronounced in

USD-CHF and USD-JPY.

US economy is still stuck in second gearUS GDP, qoq change in %, annualized

-8

-6

-4

-2

0

2

4

6

2007 2008 2009 2010 2011

Source: Bureau of Economic Analysis, Commerzbank Research

CAD: Compared with AUD and NZD the CAD is currently an underperformer. While the US

economic data does not really convince and the oil price is moving sideways the loonie is hav-ing a difficult time but has at least held steady. The Canadian GDP data for May is likely to

attract relatively little attention as the US GDP for Q2 and the political upheaval surrounding the

Daily Currency Briefing

No light at the end of the tunnel

G10 Currencies

July 29, 2011

Antje Praefcke+49 69 136 [email protected]

You-Na Park+49 69 136 [email protected]

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29 July 20112

debt ceiling are more important for the market. That means that in USD-CAD the USD will

remain the driving force. If the US GDP disappoints and remains below market expectations

USD-CAD might ease a little further. But as the area around 0.9400-20 in USD-CAD was not

breached to the downside at the beginning of the week, it is unlikely that the level will fall ahead

of the weekend. If Q2 growth in the US is abysmal concerns about a cooling of the US and as a

result also the Canadian economy will prevent more notable CAD gains. If US GDP surprises

on the upside USD will appreciate. Conclusion: one way or the other CAD will continue to trailthe best-in-class AUD and NZD ahead of the weekend.

SEK: The Swedes felt generous in June, retail sales rose by an impressive 3.1% mom and by

3.4% yoy. With support like that SEK was able to retrace the previous days losses yesterday.

Swedish Q2 GDP is due for publication today. Following +0.8% in Q1 the momentum is likely to

have weakened to 0.6% qoq, but should have remained above average. A weaker result will

however quickly put renewed pressure on SEK, in particular if uncertainty on the markets re-

mains high. Only an exceptionally good result might make it possible for the 9.0550 area in

EUR-SEK to be breached ahead of the weekend and to lead to a test of the early July low at

9.045.

PLN: Does the private sector in Poland belief the story? The inflation rate in June had fallen

notably from 5.0% to 4.2% yoy which brought out the first doves among the monetary policy

committee (MPC). The hawks among the MPC on the other hand assume that the fall in June

was a one-off so that a further rate step will be required in September/October. Todays infla-

tion expectations of the private sector might be of the essence. Should inflation expectations

have recorded a notable rise that is likely to support the zloty once again causing EUR-PLN to

aim for the next support level at 3.97.

TRY: The liras topsy turvy world? The Turkish central bank (CBRT) once again presented a

dovish inflation report yesterday and nonetheless the lira appreciated by more than 1% againstthe euro and the US dollar. The central bank seems as far away from a rate hike as ever. Ac-

cording to central bank governor Erdem Basci the current rate level is suited to keep price

pressure under control. He even repeated that monetary policy would be eased should the

situation on the global markets deteriorate further. The authorities were in a position to react to

a sudden stop of capital inflow and the development of the lira did not constitute a problem. It is

being completely ignored that the peculiar mix of low interest rates and increased reserve re-

quirements is having hardly any effect. The economy is showing the first signs of over-heating

and inflation is everything but under control. Nonetheless Basci clearly succeeded in calming

the markets temporarily. Disappointing trade balance data could well end this positive senti-

ment though and monetary policy remains a negative factor for the lira.

BRL: The minutes of the last central bank meeting confirmed that we might see a break in the

rate hike cycle. According to the central bank the inflationary outlook has improved. There wasno assertion in the minutes that monetary policy would have to be adjusted within an appropri-

ate period of time, as had been the case in the statement published directly after the rate deci-

sion. A break is not a fait accompli yet though. The central bank is likely to base its decision on

the upcoming data releases. Consumer prices are due for publication next Friday. There was

more news regarding the new tax on derivatives. It would seem that the tax will only be im-

posed as of 5th

October. Apparently more time is needed to implement the tax. The real was

able to stabilise largely yesterday having depreciated considerably against the USD on

Wednesday following the announcement of the tax. As no important data is due for publication

in Brazil, the real is likely to remain subject of general market sentiment.

Emerging Market Currencies

Antje Praefcke+49 69 136 [email protected]

Carolin Hecht+49 69 136 [email protected]

Carolin Hecht+49 69 136 41505

[email protected]

You-Na Park+49 69 136 42155

[email protected]

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29 July 20113

Todays Events

Time Region Indicator Period ActualOur

ForecastSurvey Last Direction Cross

0 0: 01 G BP G fK Co ns um er C on fi de nc e A ug -30 -26 -30

00:30 JPY CPI Jul yoy +0,2 +0,1 +0,0 +0,5

exfreshfood Jul yoy +0,4 +0,2 +0,4

ex fre sh food an d ene rgy Ju l mo m +0,3 +0,1 +0,3

00:30 JPY Unemploymentrate Jul % 4,6 4,6 4,6 4,6

00:50 JPY Industrialproduction Jul mom +3,9 +5,0 +4,5 +3,9

Jul yoy -1,6 -0,7 -1,2 -1,6

07:00 GBP NationwideHousePriceIndex Jul mom -0,2 +0,0

Jul yoy -0,8 -1,1

07:00 GER Retailsales Jun mom +2,5 +1,7 -2,5

Jun yoy -6,5 -1,6 +2,2

08:00 TRY Tradebalance Jun USDbn -9,50 -10,06

08:00 HUF Producerpriceindex Jun mom +0,1

Jun yoy +0,2 +1,2

08:30 SEK GDP Apr qoq +0,6 +0,8

Apr yoy +5,0 +6,4

09:30 GBP Mortgageapproval Jun K 46 46 46

10:00 EUR Consumerpriceindex Jul yoy +3,0 +2,7 +2,7

13:00 ZAR Tradebalance Jun ZARbn 1,0 -1,0

13:30 USA GDPannualized Q2 qoq +1,5 +1,8 +1,9

13:30 CAD GDP May mom +0,1 +0,0

14:45 USA ChicagoPMI Jul 62,0 60,0 61,1

14:55 USA Michiganconsumerconfidence Aug 63,8 64,0 63,8

Important Market Data

FX EUR-USD EUR-JPY EUR-GBP EUR-CHF EUR-CAD $ index

Current 1,4293 110,82 0,8754 1,1440 1,3598 74,22

Change (%) -0,49 -1,24 -0,49 -0,87 -0,20 +0,18

Last trading day's high 1,4400 112,25 0,8805 1,1541 1,3653 74,41

Last trading day's low 1,4255 110,84 0,8737 1,1424 1,3508 73,88

FX EUR-SEK EUR-NOK EUR-DKK EUR-HUF EUR-CZK EUR-PLN

Current 9,1033 7,7475 7,4495 268,98 24,190 4,0141

Change (%) -0,07 -0,10 -0,04 +0,17 -0,26 -0,26



FX EUR-AUD EUR-NZD EUR-BRL EUR-MXN EUR-TRY EUR-ZAR

Current 1,3048 1,6498 2,2360 16,8055 2,4054 9,6497Change (%) +0,05 -0,18 -0,56 +0,40 -1,06 +0,73



FX EUR-RUB EUR-RON EUR-CNY EUR-SGD EUR-KRW EUR-THB

Current 39,4750 4,2439 9,2064 1,7223 1505,5140 42,5003

Change (%) -0,21 -0,04 -0,52 -0,33 -0,35 -0,54



Forwards / Options Fwd 3M Fwd 6M Fwd 12M Vol 1M Vol 3M Vol 12M

EUR-USD -34,6700 -67,5400 -128,0400 12,25 12,45 12,89

3M Money Market EURIBOR $ LIBOR LIBOR LIBOR CHF LIBOR CAD LIBOR

Rate (%) 1,61 0,25 0,20 0,83 0,18 1,18

Bonds / Bond Futures 10Y Bund 10Y T-Note 10Y JGB 10Y Gilt Bund Future 10Y T-NoteFuture

Yield (%), Price 2,63 2,93 1,09 2,97 129,43 124,64

Equity Indices EuroStoxx50 DAX Dow Jones S&P 500 Nikkei 225 FTSE 100

Closing 2692,76 7190,06 12240,11 1300,67 9825,40 5873,21

Change -0,95 -62,62 -62,44 -4,22 -75,95 +16,63

Change (%) -0,04 -0,86 -0,51 -0,32 -0,77 +0,28

Oil / Prec.Metals Oil, Brent Oil, Nymex Gold Silver Palladium Platinum

$ per unit 117,24 97,04 1613,35 39,52 826,00 1778,00

Industrial Metals Aluminium Lead Copper Nickel Zinc Tin

$ per ton 2601,0 2680,0 9744,0 24370,0 2479,5 28750,0

Sources: Bloomberg L.P., European Banking Federation, British Bankers Association,

Dow Jones, Xetra, S&P, TSE, LSE, LME.

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