GLOBAL FX STRATEGY

Foreign Exchange

CFTC Commitments of Traders

CURRENCY STRATEGISTS

Camilla Sutton, CFA, CMT Sacha Tihanyi (416) 866-5470 (416) 862-3154

Camilla_Sutton@scotiacapital.com Sacha_Tihanyi@scotiacapital.com

Friday, August 20, 2010

USD RALLY PUSHES SOME SHORTS OUT OF THE MARKET - Data in this report covers up to Tuesday August 17 and is released on Friday August 20. • The net short USD position fell by $4bn to $17.8bn outstanding, with the largest positioning shifts coming against CAD and EUR, though GBP also saw a relatively large negative shift in positioning. While AUD and CHF were the only two major currencies to see constructive positioning shifts against the USD, the gains were rather subdued. • The net long CAD position fell by $1.2bn to $3bn outstanding, which is somewhat surprising considering the performance of CAD through Tuesday on the announcement of BHP’s interest in buying Potash. It is likely that the previous week’s sharp weakening in CAD significantly hurt bullish position-ing, and that the CFTC data actually reflects a good deal of moderation in this negativity. This begs the question of how negative CAD positioning would be in the absence of the M&A news. Weak CPI data on Friday and the subsequent sharp rise in USDCAD will do nothing to support an im-provement in bullish loonie positioning. • The net short EUR position increased after almost reaching flat last week. Shorts increased by a margin of 3 to 1 against longs, leading to a $1.8bn increase in the net short EUR position. This leaves the overall position at a still relatively subdued $2.4bn net short. • GBP bulls backed off as longs were cut and shorts increased almost one-for-one, placing speculative GBP positioning back into net short territory. The ability of GBPUSD to close this week above the pivotal 1.55 is positive, however the pair remains challenged given Friday’s dip below that level, suggesting shorts will become increasingly emboldened. • The net short US 10-year Treasury position was virtually unchanged (falling only marginally), but US economic data has not shown any propen-sity for sharp improvement, suggesting shorts will continue to be pressured.

* A trader is classified as “non-commercial” by the Commodity Futures Trading Commis-sion if the trader is not using futures contracts in a particular currency for hedging purposes (as defined by the Commission). This category of futures trader is generally considered to include individual investors, hedge funds and other large financial institutions engaged in trading the securities for speculative purposes.

$mnsw/w 17-Aug 10-Aug 17-Aug

CAD -11,665 29,514 41,179 3,021EUR -10,896 -14,627 -3,731 -2,419GBP -9,452 -4,431 5,021 -442JPY -2,509 49,969 52,478 7,282CHF 849 11,750 10,901 1,414AUD 3,327 57,697 54,370 5,266NZD -405 12,139 12,544 891MXN -1,816 70,553 72,369 2,804Total -32,567 212,564 245,131 17,816

ContractsNet Long (Short) Non-Commercial Positions

Date Long Short Net Long Short Net17-Aug 34,446 4,932 29,514 -12,170 -505 -11,66510-Aug 46,616 5,437 41,179 6,281 -716 6,9973-Aug 40,335 6,153 34,182 13,290 2,976 10,31427-Jul 27,045 3,177 23,868 3,306 -4,138 7,444

CAD — Non-Commercial Futures Positionsw/w changeContracts of 100,000 CAD

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Date Long Short Net Long Short Net Date Long Short Net Long Short Net17-Aug 61,324 75,951 -14,627 5,527 16,423 -10,896 17-Aug 31,467 35,898 -4,431 -4,448 5,004 -9,45210-Aug 55,797 59,528 -3,731 -4,613 -8,179 3,566 10-Aug 35,915 30,894 5,021 4,857 -414 5,2713-Aug 60,410 67,707 -7,297 3,788 -10,254 14,042 3-Aug 31,058 31,308 -250 13,951 -3,739 17,69027-Jul 56,622 77,961 -21,339 1,614 -1,298 2,912 27-Jul 17,107 35,047 -17,940 659 -8,168 8,827

Date Long Short Net Long Short Net Date Long Short Net Long Short Net17-Aug 62,745 12,776 49,969 -2,569 -60 -2,509 17-Aug 18,041 6,291 11,750 1,266 417 84910-Aug 65,314 12,836 52,478 3,591 -889 4,480 10-Aug 16,775 5,874 10,901 -3,527 1,795 -5,3223-Aug 61,723 13,725 47,998 13,235 -4,842 18,077 3-Aug 20,302 4,079 16,223 5,019 -4,988 10,00727-Jul 48,488 18,567 29,921 -6,245 4,745 -10,990 27-Jul 15,283 9,067 6,216 -4,694 4,203 -8,897

EUR — Non-Commercial Futures Positions GBP — Non-Commercial Futures Positions

CHF — Non-Commercial Futures PositionsJPY — Non-Commercial Futures PositionsContracts of 12.5M JPY w/w change Contracts of 125,000 CHF w/w change

w/w changeContracts of 125,000 EUR Contracts of 62,500 GBP w/w change

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Date Long Short Net Long Short Net Date Long Short Net Long Short Net17-Aug 71,020 13,323 57,697 2,667 -660 3,327 17-Aug 17,595 5,456 12,139 -1,397 -992 -40510-Aug 68,353 13,983 54,370 6,257 602 5,655 10-Aug 18,992 6,448 12,544 -1,361 1,154 -2,5153-Aug 62,096 13,381 48,715 10,814 2,632 8,182 3-Aug 20,353 5,294 15,059 1,955 570 1,38527-Jul 51,282 10,749 40,533 6,029 -1,618 7,647 27-Jul 18,398 4,724 13,674 3,875 -826 4,701

Date Long Short Net Long Short Net Date Long Short Net Long Short Net17-Aug 81,187 10,634 70,553 563 2,379 -1,816 17-Aug 257,563 195,507 62,056 3,021 1,301 1,72010-Aug 80,624 8,255 72,369 18,121 893 17,228 10-Aug 254,542 194,206 60,336 -377 -5,035 4,6583-Aug 62,503 7,362 55,141 10,719 896 9,823 3-Aug 254,919 199,241 55,678 19,180 7,815 11,36527-Jul 51,784 6,466 45,318 8,233 -1,199 9,432 27-Jul 235,739 191,426 44,313 3,992 -4,176 8,168

AUD — Non-Commercial Futures Positions NZD — Non-Commercial Futures Positions

NYMEX Crude — Non-Commercial Futures PositionsMXN — Non-Commercial Futures Positions

Contracts of 100,000 AUD w/w change Contracts of 100,000 NZD w/w change

Contracts of 500,000 MXN w/w change Contracts of 1,000 Barrels w/w change

Global FX Research Friday, August 20, 2010

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This report is prepared by The Bank of Nova Scotia (Scotiabank) as a resource for the clients of Scotiabank and Scotia Capital. Opinions, estimates and projections con-tained herein are our own as of the date hereof and are subject to change without notice. The information and opinions contained herein have been compiled or arrived at from sources believed reliable but no representation or warranty, express or implied, is made as to their accuracy or completeness and neither the information nor the forecast shall be taken as a representation for which The Bank or its affiliates or any of their employees incur any responsibility. Neither Scotiabank or its affiliates accept any liability whatsoever for any loss arising from any use of this report or its contents. This report is not, and is not constructed as, an offer to sell or solicitation of any offer to buy any of the currencies referred to in this report. Scotiabank, its affiliates and/or their respective officers, directors or employees may from time to time take positions in the currencies mentioned herein as principal or agent. Directors, officers or employees of Scotiabank and its affiliates may serve as directors of corporations referred to herein. Scotiabank and/or its affiliates may have acted as financial advisor and/or underwriter for certain of the corporations mentioned herein and may have received and may receive remuneration for same. This report may include forward-looking statements about the objectives and strategies of members of the Scotiabank Group. Such forward-looking statements are inherently subject to uncertainties beyond the control of the members of the Scotiabank Group including but not limited to economic and financial conditions globally, regulatory development in Canada and elsewhere, technologi-cal developments and competition. The reader is cautioned that the member's actual performance could differ materially from such forward-looking statements. You should