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MAY LOSE VALUE

Citibank Wealth Management

Nov 26, 2018

with data as of Nov 23, 2018

Weekly FX Strategy FX Analysis Data Forecasts

Weekly FX Insight Please note and carefully read the

Important Disclosure on the last part
0
Please note and carefully read the Important Disclosure on the last part

Weekly FX Strategy: CAD

CAD news
• CAD was supported amid weak US data that undermine USD.
Durable goods orders dropped 4.4% in Oct while housing
starts only rose 1.5%, worse thane expected.
• Canada’s retail sales rose 0.2% in Oct and CPI rose 2.4%
yoy, both beating expectations.
• Oil price dropped 11% last week, which restrained CAD.
Strategy for CAD holders - Diversify into USD
• Canada mainly export oil products. Oil price has dropped
recently. CAD may be restrained amid concerns on
Canada’s export income.
• If Trump-Xi negotiations break down, we expect the US to
further implement trade and investment restrictions, which
may make markets more volatile and undermine CAD.

CAD outlook
Strategy Reference Level Target Level
• The BoC estimates the neutral rate to be in the range of
2.5%-3.5%. We continue to expect three more rate hikes in Bearish on CAD USD 1.2952 1.3386
2019, which would take the policy rate to 2.5% and underpin Bearish on CAD HKD 6.05 5.85
the CAD. However, recent oil weakness may restrain CAD.

0-3M forecast: 1.33
USD/CAD – Daily Chart
6-12M Forecast: 1.30 LT Forecast: 1.20 Strategy for USD holders - Buy CAD upon retracement
• Next steps for the USMCA include the signage of the deal
during the G20 Summit in late Nov, its ratification in 2019
1.3386(Jun top)
and the implementation in 2020, which may underpin CAD.
• The BOC’s rate hike pace is only slower than the Fed. The
BoC may hike rates for three times next year while the Fed
1.2952(fibo 0.618)
may end its rate hike cycle in 2Q19.

Strategy Reference Level Target Level

Bullish on CAD USD 1.3386 1.2952
Bullish on CAD HKD 5.85 6.05
Source: Bloomberg L.P., as of Nov 23, 2018
• USD/CAD’s RSI fell after rising to overbought territory and
downside may increase. Upside may be limited at 1.3386
and the pair may range trade between 1.2953-1.3386 in The brackets are the exchange rates in terms of Hong Kong
short term. dollar, with HKD $7.8258 exchange rate for reference 1
Please note and carefully read the Important Disclosure on the last part

Weekly FX Strategy: AUD

AUD news Strategy for NZD holders - Diversify into USD
• Markets are currently facing several risk events including US-China
tensions, sell-off in US tech stocks, Brexit deadlock, which restrained • US-China tensions continue and FOMC’s next year rate hike
AUD. path still concerns investors. AUD may be undermined amid
• Recently dovish rhetoric from Fed officials has led the market to price a increasing market volatility.
shallower pace of hikes, which may restrain USD and underpin AUD.
• The EU approved the Brexit deal at a summit. But it still has to be passed • We expect the RBA not to hike rates until 4Q19, later than
by the UK Parliament, with Conservative MPs stating their opposition. the Fed, BoC and RBNZ, which may restrain AUD.
AUD outlook
• Tighter credit conditions are spreading beyond housing to businesses
amid continued housing market correction in Australia. Meanwhile, Strategy Reference Level Target Level
although the labor market remains strong, wage growth is tepid and
Bearish on AUD USD 0.7382 0.7021
the RBA may keep interest rates unchanged. if the Chinese
authorities ease monetary conditions via weakening of the RMB, AUD Bearish on AUD HKD 5.78 5.50
may move with it. Stretched net short speculative positioning in
AUD/USD, AUD may find support at lows.

0-3M forecast: 0.71 6-12M forecast: 0.70 LT forecast: 0.77

Strategy for USD holders - Buy NZD upon retracement
AUD/USD – Daily Chart
• Australia’s private capital expenditure will be released on
Thursday. The figure may rise from -2.5% to 1.7%, which
may support AUD.
0.7484 (Jul top) • US midterm elections resulted in a divided Congress. It may
become more difficult for Trump to implement fiscal stimulus,
0.7382 (Aug 21 top)
USD may be undermined and AUD may be underpinned.
0.7021 (Oct low)
Strategy Reference Level Target Level
Bullish on AUD USD 0.7021 0.7382
Source: Bloomberg L.P., as of Nov 23, 2018 Bullish on AUD HKD 5.50 5.78
• Since AUD/USD has breached a downtrend channel and the
RSI has risen close to overbought territory, upside may be
limited at 0.7382-0.7484, with support at 0.7021. The brackets are the exchange rates in terms of Hong Kong
dollar, with HKD $7.8258 exchange rate for reference 2
Please note and carefully read the Important Disclosure on the last part

NZD/CAD

0.9101 (Nov top)

0.8779(fibo 0.618)

AUD/CAD

0.9674(fibo 0.50)

0.9374(fibo 0.764)

Source: Bloomberg L.P., as of Nov 23, 2018 3

Please note and carefully read the Important Disclosure on the last part

The brackets are the exchange rates in terms of Hong Kong

Dollar Index dollar, with HKD $7.8258 exchange rate for reference
USD outlook: 0-3M forecast: 97.62 6-12M forecast: 94.18 LT forecast: 84.85
• More medium term, our view is that the fiscal support to growth
eventually fades in the US and tighter monetary policy starts to 0-3M forecast: 97.62
bite. Moreover, In 2Q19 we expect the Fed to raise rates for the
last time. In Q3 we expect the ECB to begin raising rates. Fading
USD yield advantage may undermine USD.
6-12M forecast: 94.18
• Developments in other major countries and regions will matter.
Europe will have to deal with stress in Italy in the near term and
the Brexit situation over the medium term. This may be a drag
on the EUR, which may underpin USD.
• USD around 1% stronger vs. G10 over 0-3m and around 2%
weaker over 6-12m.
• Dollar index 0-3 month forecast: 97.62; 6-12 month forecast:
94.18; Long term forecast: 84.85.
Source: Bloomberg L.P., as of Nov 23, 2018

USD/CNH
RMB outlook: 0-3M forecast: 7.00 6-12M forecast: 6.95 LT forecast: 6.50
• DXY strengthening, the US-China trade war further escalating
and capital outflow owing to the growth slowdown and divergent 6.9895 (Jan 2017 top)
monetary policy with other countries are key risks. We believe
PBoC won’t tolerate the currency to be driven either by the
6.8117(fibo 0.236)
market force or by a strong dollar to have a one-way large
depreciation.
Strategy Reference Level Target Level
Bearish on CNH USD 6.8117 6.9895
Bearish on CNH HKD 1.1494 1.1202

Bullish on CNH USD 6.9895 6.8117

Bullish on CNH HKD 1.1202 1.1494 Source: Bloomberg L.P., as of Nov 23, 2018 4
Please note and carefully read the Important Disclosure on the last part

The brackets are the exchange rates in terms of Hong Kong

GBP/USD dollar, with HKD $7.8258 exchange rate for reference
GBP outlook: 0-3M forecast: 1.26 6-12M forecast: 1.30 LT forecast: 1.48
• Political uncertainty may cause significant downside risks. It seems
likely that the draft UK-EU withdrawal agreement will be voted down
by the “Meaningful Vote” in the House of Commons. Therefore, the
probability of a market friendly transition arrangement are falling fast. 1.3175(Nov top)
The UK is facing completely unchartered waters on economic and
political spectrum. What’s cheap can certainly get cheaper.
1.2662 (Aug low)
Strategy Reference Level Target Level
Bearish on GBP USD 1.3175 1.2662 1.2351 (Apr 2017 low)

Bearish on GBP HKD 10.32 9.91

Bullish on GBP USD 1.2662 1.3175

Bullish on GBP HKD 9.91 10.32
Source: Bloomberg L.P., as of Nov 23, 2018

USD/JPY
JPY outlook: 0-3M forecast: 115 6-12M forecast: 113 LT forecast: 100
• For much of this year, USD/JPY has been driven by rising US
114.73 (Nov 2017 top)
real yields. yields still seem in a rising trend over 0-3m, which
may pressure JPY. Real yields may finally retreat as Fed policy
ends up restrictive just when the fiscal stimulus from tax reform 110.84(fibo 0.382)
begins to fade, which may support JPY.

Strategy Reference Level Target Level

Bearish on JPY USD 110.84 114.73
Bearish on JPY HKD 7.06 6.82

Bullish on JPY USD 114.73 110.84

Bullish on JPY HKD 6.82 7.06 Source: Bloomberg L.P., as of Nov 23, 2018 5
Please note and carefully read the Important Disclosure on the last part

The brackets are the exchange rates in terms of Hong Kong

NZD/USD dollar, with HKD $7.8258 exchange rate for reference
NZD outlook: 0-3M forecast: 0.68 6-12M forecast: 0.66 LT forecast: 0.67
• The November RBNZ meeting seemed more upbeat than the past few
months with risks now ‘balanced’ amid firmer quarterly inflation data
coupled with strong labor market data. NZD looks slightly cheap to dairy
prices in the short term, so a short term move higher is plausible. Cooling
housing sector and business confidence downtrend signs may undermine
0.6931(fibo 0.50)
NZD in the long term. Meanwhile, trade war risks continue to rumble on
and with ADXY continuing to fall, this also leaves NZD looking vulnerable. 0.6884 (Nov top)
Strategy Reference Level Target Level
0.6600(55MA)
Bearish on NZD USD 0.6884 0.6600
Bearish on NZD HKD 5.39 5.17

Bullish on NZD USD 0.6600 0.6884

Bullish on NZD HKD 5.17 5.39 Source: Bloomberg L.P., as of Nov 23, 2018

EUR/USD
EUR outlook: 0-3M forecast: 1.13 6-12M forecast: 1.18 LT forecast: 1.30
• Periphery spreads widened as Italian efforts to run higher budget
deficits in defiance of EU advisory rumble on. This undermines EA
banks and hurts EUR. We see no immediate respite on this front with
spreads possibly remaining elevated, or rising further. US fiscal
stimulus and Chinese monetary reflation have limited impacts on EA 1.1709(fibo
1.1709(fibo 0.618) 0.618)
data momentum. Long term, EUR may be supported as the ECB
tapers QE to zero and normal positive bond supply in EA sovereigns
resumes in 2019.
1.1187(Nov low)
Strategy Reference Level Target Level
Bearish on EUR USD 1.1709 1.1187
Bearish on EUR HKD 9.17 8.76

Bullish on EUR USD 1.1187 1.1709

Bullish on EUR HKD 8.76 9.17 Source: Bloomberg L.P., as of Nov 23, 2018 6
Please note and carefully read the Important Disclosure on the last part

The brackets are the exchange rates in terms of Hong Kong

USD/CHF dollar, with HKD $7.8258 exchange rate for reference
CHF outlook: 0-3M forecast: 1.00 6-12M forecast: 0.98 LT forecast: 0.92
• Swiss inflation appears to be waning again. A SNB Governing 1.0171 (Mar 2017 top)
Board Member also affirmed our view that the SNB is also in no
rush to tighten policy as inflationary pressures remained low.
• With the currency still “highly valued, the SNB may want to see
CHF weaken in the medium term.
• In the short term, rising periphery spreads may contribute to
CHF appreciation. Thus, there may come a time where the SNB
0.9789 (Jun low)
intervenes

Technical Analysis:
• Since the RSI has risen to overbought territory, USD/CHF short-
term upside may be limited and the pair may range trade
between 0.9953-1.0171. Source: Bloomberg L.P., as of Nov 23, 2018

EM Currencies
EM Currencies outlook:
• Over the past month, EM FX stayed flat versus the dollar.
• We see EM FX roughly 1% stronger vs the USD. This forecast is
based on a stronger EUR forecast in 12m, higher equities, and
broadly flat oil prices that we predicts.
• We expect Asian currencies to strengthen by 1.1% in 6-12m.
• We see LatAm FX appreciate 2.1% in 6-12m.

Source: Bloomberg L.P., as of Nov 23, 2018 7

Please note and carefully read the Important Disclosure on the last part

Appendix 1: Last week performance, Citi interest rate and FX Forecasts

Citi FX Outlook Forecast Citi FX interest rate Forecast

0-3 month 6-12 month Long-term 11/23/2018 4Q ‘18 1Q ’19 2Q ’19
Dollar Index 97.62 94.18 84.85 2.25 2.50 2.75 3.00
EUR/USD 1.13 1.18 1.30 0.00 0.00 0.00 0.00
GBP/USD 1.26 1.30 1.48 0.75 0.75 0.75 0.75
USD/JPY 115 113 100 -0.10 -0.10 -0.10 -0.10
USD/CHF 1.00 0.98 0.92 -0.75 -0.75 -0.75 -0.75
AUD/USD 0.71 0.70 0.77 1.50 1.50 1.50 1.50
NZD/USD 0.68 0.66 0.67 1.75 1.75 1.75 1.75
USD/CAD 1.33 1.30 1.20 1.75 1.75 2.00 2.25
USD/CNY 7.00 6.95 6.50 3.40 3.40 3.40 3.40
Source: Citi, forecast as of Nov 16, 2018 Rate cut Rate hike
expectations expectations

Major Currencies Weekly Performance

Last week Weekly Year-To-Date
1 month high 1 month low 3 month high 3 month low 52 week high 52 week low
CCY close Change Change
USD 96.92 0.5% 97.54 95.96 97.54 93.91 97.69 88.25 5.2%
EUR/USD 1.1337 -0.7% 1.1471 1.1218 1.1777 1.1218 1.2555 1.1216 -5.6%
USD/JPY 112.96 0.1% 114.07 111.91 114.53 110.75 114.55 104.56 0.2%
GBP/USD 1.2814 -0.2% 1.3126 1.2706 1.3265 1.2706 1.4377 1.2662 -5.1%
USD/CAD 1.3238 0.7% 1.3306 1.3057 1.3306 1.2814 1.3386 1.2251 4.9%
AUD/USD 0.7233 -1.4% 0.7332 0.7055 0.7351 0.7052 0.8136 0.7021 -7.4%
NZD/USD 0.6781 -1.4% 0.6878 0.6517 0.6878 0.6443 0.7438 0.6425 -4.6%
USD/CHF 0.9974 -0.3% 1.0109 0.9935 1.0109 0.9587 1.0128 0.9188 2.3%
USD/CNY 6.9485 0.2% 6.9757 6.8907 6.9757 6.8031 6.9799 6.2431 6.4%
USD/CNH 6.9449 0.4% 6.9752 6.8981 6.9752 6.7936 6.9805 6.2361 6.2%
GOLD 1223.05 0.0% 1233.79 1200.37 1233.79 1182.83 1366.15 1160.39 -6.1%

Source: Bloomberg L.P., as of Nov 23, 2018 8

Please note and carefully read the Important Disclosure on the last part

Appendix 2: Last week’s Economic Figures

Time Importance Event Period Actual Survey Prior

Tuesday
11/20/18 08:30 AU !! RBA Nov. Meeting Minutes Nov
11/20/18 21:30 US !! Housing Starts MoM Oct 1.50% 2.20% -5.50%
11/20/18 21:30 US !! Building Permits MoM Oct -0.60% -0.80% 1.70%
Wednesday
11/21/18 07:30 AU ! Westpac Leading Index MoM Oct 0.08% -- -0.02%
11/21/18 21:30 US !! Durable Goods Orders Oct -4.40% -2.60% -0.10%
11/21/18 21:30 US !! Durables Ex Transportation Oct 0.10% 0.40% -0.60%
11/21/18 21:30 US ! Initial Jobless Claims Nov 224k 215k 221k
11/21/18 23:00 US ! Leading Index Oct 0.10% 0.10% 0.60%
11/21/18 23:00 US !! Existing Home Sales MoM Oct 1.40% 1.00% -3.40%
11/21/18 23:00 US !! U. of Mich. Sentiment Nov 97.5 98.3 98.3
Thursday
11/22/18 07:30 JN !! Natl CPI Ex Fresh Food YoY Oct 1.00% 1.00% 1.00%
Friday
11/23/18 17:00 EC !! Markit Eurozone Manufacturing PMI Nov 51.5 52 52
11/23/18 17:00 EC !! Markit Eurozone Services PMI Nov 53.1 53.5 53.7
11/23/18 21:30 CA !! Retail Sales MoM Sep 0.20% 0.10% 0.00%
11/23/18 21:30 CA !! Retail Sales Ex Auto MoM Sep 0.10% 0.30% -0.40%
11/23/18 21:30 CA !! CPI YoY Oct 2.40% 2.20% 2.20%
11/23/18 21:30 CA !! CPI Core- Common YoY% Oct 1.90% 1.90% 1.90%
11/23/18 22:45 US ! Markit US Manufacturing PMI Nov 55.4 55.7 55.7

Source: Bloomberg L.P. 9

Please note and carefully read the Important Disclosure on the last part

Appendix 3: Upcoming Economic Figures (Nov 26, 2018 – Nov 30, 2018)

Time Importance Event Period Actual Survey Prior

Monday
11/26/18 05:45 NZ !! Retail Sales Ex Inflation QoQ 3Q -- -- 1.10%
11/26/18 17:00 GE !! IFO Business Climate Nov -- -- 102.8
Tuesday
11/27/18 05:45 NZ !! Trade Balance NZD Oct -- -- -1560m
11/27/18 05:45 NZ !! Exports NZD Oct -- -- 4.33b
11/27/18 05:45 NZ !! Imports NZD Oct -- -- 5.89b
11/27/18 23:00 US !! Conf. Board Consumer Confidence Nov -- 136.8 137.9
Wednesday
11/28/18 21:30 US !! Advance Goods Trade Balance Oct -- -$75.4b -$76.0b
11/28/18 21:30 US !!! GDP Annualized QoQ 3Q -- 3.70% 3.50%
11/28/18 23:00 US ! New Home Sales MoM Oct -- 5.80% -5.50%
Thursday
11/29/18 08:00 NZ ! ANZ Business Confidence Nov -- -- -37.1
11/29/18 08:30 AU !! Private Capital Expenditure 3Q -- -- -2.50%
11/29/18 21:30 CA ! Current Account Balance 3Q -- -- -$15.88b
11/29/18 21:30 US !! Personal Income Oct -- 0.40% 0.20%
11/29/18 21:30 US !! Personal Spending Oct -- 0.50% 0.40%
11/29/18 21:30 US ! Initial Jobless Claims Nov -- -- --
11/29/18 23:00 US !! Pending Home Sales NSA YoY Oct -- -- -3.40%
Friday
11/30/18 03:00 US !!! FOMC Meeting Minutes Nov -- -- --
11/30/18 05:00 NZ ! ANZ Consumer Confidence MoM Nov -- -- -1.90%
11/30/18 05:45 NZ ! Building Permits MoM Oct -- -- -1.50%
11/30/18 08:01 UK ! GfK Consumer Confidence Nov -- -- -10
11/30/18 09:00 CH !! Non-manufacturing PMI Nov -- -- 53.9
11/30/18 09:00 CH !! Manufacturing PMI Nov -- -- 50.2
11/30/18 18:00 EC !! CPI Estimate YoY Nov -- -- 2.20%
11/30/18 21:30 CA !! GDP YoY Sep -- -- 2.50%

Source: Bloomberg L.P. 10

Please note and carefully read the Important Disclosure on the last part

Appendix 4: Upcoming Economic Figures (Dec 3, 2018 – Dec 7, 2018)

Time Importance Event Period Actual Survey Prior

Monday
12/03/18 07:50 JN !! Capital Spending YoY 3Q -- -- 12.80%
12/03/18 17:00 EC !! Markit Eurozone Manufacturing PMI Nov -- -- --
12/03/18 17:30 UK !! Markit UK PMI Manufacturing SA Nov -- -- 51.1
12/03/18 23:00 US !! ISM Manufacturing Nov -- 58.3 57.7
Tuesday
12/04/18 11:30 AU !! RBA Cash Rate Target Dec -- 1.50% 1.50%
Wednesday
12/05/18 08:30 AU !! GDP YoY 3Q -- -- 3.40%
12/05/18 17:00 EC !! Markit Eurozone Services PMI Nov -- -- --
12/05/18 17:30 UK !! Markit/CIPS UK Services PMI Nov -- -- 52.2
12/05/18 21:15 US !! ADP Employment Change Nov -- -- 227k
12/05/18 23:00 CA !!! Bank of Canada Rate Decision Dec -- 1.75% 1.75%
12/05/18 23:00 US !! ISM Non-Manufacturing Index Nov -- 59.5 60.3
Thursday
12/06/18 08:30 AU !! Trade Balance Oct -- -- A$3017m
12/06/18 08:30 AU ! Retail Sales MoM Oct -- -- 0.20%
12/06/18 21:30 CA !! Int'l Merchandise Trade Oct -- -- -0.42b
12/06/18 21:30 US !! Trade Balance Oct -- -$53.0b -$54.0b
12/06/18 21:30 US ! Initial Jobless Claims Dec -- -- --
12/06/18 23:00 CA ! Ivey Purchasing Managers Index SA Nov -- -- 61.8
Friday
12/07/18 18:00 EC !! GDP SA YoY 3Q -- -- 1.70%
12/07/18 21:30 CA !! Net Change in Employment Nov -- -- 11.2k
12/07/18 21:30 CA !! Unemployment Rate Nov -- -- 5.80%
12/07/18 21:30 US !!! Change in Nonfarm Payrolls Nov -- 208k 250k
12/07/18 21:30 US !!! Unemployment Rate Nov -- 3.70% 3.70%
12/07/18 21:30 US !!! Average Hourly Earnings MoM Nov -- 0.30% 0.20%
12/07/18 23:00 US !! U. of Mich. Sentiment Dec -- -- 97.5

Source: Bloomberg L.P. 11

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13
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14
Important Disclosure
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on the convertibility, utilisation or transferability of RMB (if any) which in turn is affected by, amongst other things, the PRC
government's control, there is no guarantee that disruption in the transferability, convertibility or liquidity of RMB will not
occur. There is thus a likelihood that you may not be able to convert RMB received into other freely convertible currencies.

CNH exchange rates and CNY exchange rates are currently quoted in different markets with different exchange rates,
whereby their exchange rate movements may not be in the same direction or magnitude. Therefore, the CNH exchange
rate may be different from the CNY exchange rate.

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