GLOBAL ECONOMICS & FX STRATEGY | FOREIGN EXCHANGE …...In Europe, a way out of the Brexit imbroglio may emerge from the UK general election. The British pound (GBP) rose sharply in

1

GLOBAL ECONOMICS & FX STRATEGY

| FOREIGN EXCHANGE OUTLOOK

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December 5, 2019

AMERICAS

The greenback is on track to close out the decade on a

relatively weak note as easing trade tensions between the

US and China erode the safe-haven appeal of the USD.

Alongside fading trade risks and improved global growth

dynamics, we expect that USD will weaken through 2020.

The CAD is set to strengthen next year on the back of higher

interest rate and growth differentials against most of the G-10

space and as the greenback loses its risk-on shine. Social

unrest in LatAm has bred caution amongst investors vis-à-vis

the regional currencies.

EUROPE

The GBP has reached a seven-month high ahead of a Tory

parliamentary majority at the Dec 12 elections—and an

unobstructed path for the PM’s Brexit bill—with gains

expected to continue through 2020 amid improved sentiment.

An end to Brexit fears and improving growth prospects will

support the EUR but the relatively high degree of ECB

accommodation will do little to support European yields, thus

limiting EUR upside.

ASIA-PACIFIC

An improved global trade outlook should provide a boost to

Pacific Rim exporter currencies such as the TWD, KRW, and

CNY, with the latter expected to benefit more significantly

from a would-be trade deal with the US despite a loosening

of monetary policy by the PBoC.

CONTENTS

Market Tone & Fundamental Outlook 3

United States & Canada 4-5

G10

(Eurozone, United Kingdom,

Japan, Australia)

6-7

China, India, Brazil 8-9

Pacific Alliance

(Mexico, Colombia, Chile, Peru) 10-11

Developing Economies

(South Korea, Thailand, Taiwan,

Malaysia)

12-13

Global Currency Forecast 14

Contacts & Contributors 15-16

https://www.scotiabank.com/ca/en/about/global-economics/economics-publications.html

https://twitter.com/ScotiaEconomics

2

December 5, 2019




Global Foreign Exchange Outlook

91

97

103

109

115

121

127

Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19

USDJPY

1.00

1.10

1.20

1.30


EURUSD

1.18

1.26

1.33

1.41

1.48

1.56

1.63

1.71


GBPUSD

0.98

1.06

1.13

1.21

1.28

1.36

1.43


USDCAD

0.65

0.70

0.75

0.80

0.85

0.90

0.95


AUDUSD

12.0

13.8

15.5

17.3

19.0

20.8

22.5


USDMXN

Spot Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

1.11 1.12 1.14 1.15 1.16 1.17 1.18 1.19 1.20

109 107 107 105 105 103 103 102 102

1.31 1.33 1.34 1.36 1.36 1.38 1.39 1.41 1.42

1.32 1.28 1.27 1.26 1.25 1.25 1.25 1.25 1.25

0.68 0.69 0.70 0.71 0.72 0.72 0.73 0.73 0.74

19.38 20.84 20.97 21.16 21.23 21.47 21.28 21.34 21.65

2020f 2021f

USDCADAUDUSD

EURUSDUSDJPY

GBPUSD

December 5, 2019

USDMXN

Core Exchange Rates



3

December 5, 2019




Market Tone & Fundamental Focus

While broader market risks—from trade disputes to slow global growth momentum—have remained ever present, the US dollar

(USD) is heading into the end of the year on a somewhat defensive note, having lost ground against its G-10 peers overall since the

end of September. In trade-weighted terms, the USD remains relatively firm, holding near the highest level since 2017. However, it

has failed to advance significantly over the past 12 months and we remain of the opinion that it is more likely to fall than rise from

current levels in the medium term.

The USD has benefitted significantly from safe haven demand amid trade uncertainty over the past year. Analysis by Scotiabank

Economics estimates that the USD was trading some 11% above its fundamental value as of October due to uncertainty driving

demand for USD-denominated safe haven assets. But progress on trade—absent at this point, admittedly—should boost growth

prospects and reduce the appeal of holding safe haven assets. Also, the Fed’s mid-cycle policy correction has reduced the USD’s

yield advantage and growth has slowed from the 3% clip seen at the start of the year. We expect the US economy’s growth

advantage to weaken further in 2020 while more stable monetary policy settings may expose the USD to scrutiny of the US’s

structural imbalances. The October peak in the USD against its major currency peers generally may represent a high water mark of

some significance, we feel.

The commodity currencies have taken diverging courses so far in 2019; trade uncertainty and interest rate reductions in Australia

and New Zealand have undercut the Australian and New Zealand dollars (AUD and NZD respectively) whereas the Canadian dollar

(CAD) has gained modestly against the USD. The CAD has been supported by more stable (and relatively higher) interest rates

while domestic growth momentum has held up well. We think the relative under-performance of the AUD and NZD versus the CAD

may be poised to reverse, particularly if the global economy can stabilize and strengthen. But we also expect the CAD to gain

versus the USD in the medium term – partly reflecting some reversal in the USD’s safe haven status and partly reflecting CAD-

supportive growth and interest rate differentials. We are maintaining a 1.25 forecast for the end of 2020.

In Europe, a way out of the Brexit imbroglio may emerge from the UK general election. The British pound (GBP) rose sharply in

early October and will end the year well above where we had previously expected (1.22 in our last forecast). Current polling

suggests Prime Minister Johnson is likely to obtain a working majority which will facilitate an end to the parliamentary deadlock over

Brexit. We expect a clear win for the Conservatives in the election to propel the GBP sharply higher still in anticipation of Johnson’s

January 31st exit from the EU being approved. This will avert a “hard” Brexit and provide some clarity for the UK economy – and the

EU. We caution, however, that there are still likely to be significant hurdles for the UK government as it uses the transition period

(through the end of 2020) to work out a trade agreement with Brussels. We expect a Brexit deal to be somewhat supportive for the

euro (EUR) but investors may struggle to warm to the single currency while European Central bank policy remains accommodative.

The Japanese yen (JPY) has resisted the broader rise of the USD this year (and the Swiss franc—CHF—is virtually flat versus the

USD), reflecting sporadic demand for safe-havens amid vacillating trade, geopolitical and market risks. Japan’s large and persistent

current account surpluses (in excess of 3% of GDP) leave the currency less prone to capital flight and support its “refuge” status.

We anticipate modest gains for the JPY versus a weaker USD in the coming year and anticipate some under-performance on the

crosses as trade tensions abate.

Outside of the major currencies, recent developments have been dominated by severe social unrest, negative economic shocks and

currency depreciation in Latin America. Despite regional volatility, weak domestic growth and Banxico leaving the door open to

lower policy rates, the Mexican peso (MXN) has remained generally stable over the past quarter. However, the USD has risen

steadily from the 19 level over the past month, reflecting pressure on the Chilean (CLP) and Colombian (COP) pesos as well as the

Brazilian real (BRL), all of which fell to record lows against the USD. Intervention has helped stabilize the CLP and BRL for now but

investors will remain cautious in the near term as they assess how policy makers balance the impact of loose or looser policy

settings that economic support programmes will entail with the need to stabilize their currencies.

In Asia, extensive social unrest in Hong Kong has been reflected in upward pressure on Hong Kong dollar (HKD) forward points but

the HKD currency board is stable and the monetary authorities retain a considerable “war chest” of FX reserves to dissuade

speculative attacks. The renminbi (CNY) has strengthened modestly through Q4 so far despite sluggish growth data and the

People’s Bank of China relaxing short term rates modestly in a bid to spur growth and lending. The relatively steady trading in the

CNY suggests that local investors remain hopeful that the US and China can make progress towards a “skinny” trade deal sooner

rather than later. A better global trade environment will be supportive for exporter nations’ currencies, such as the CNY, Korean won

(KRW) and Taiwan dollar (TWD).

Shaun Osborne, 1.416.945.4538 Foreign Exchange Strategy [email protected]



4

December 5, 2019




Canada Currency Outlook

The CAD has struggled to pick up much support over the past month despite some positives. Stable Bank of Canada (BoC)

monetary policy has kept interest rate spreads effectively flat versus the US (for 2Y government bond spreads) but the CAD has

traded sideways at best, ignoring favourable interest rate differentials. The trade backdrop is encouraging (on USMCA and a

breakthrough in US/China talks) by most accounts, but the CAD has failed to respond. Crude oil prices have remained stable at

relatively firm levels in the past few weeks, but the CAD is indifferent. The soft CAD trend perhaps reflects its tendency to weaken

against the USD through the turn of the year but, regardless of the cause, it has forced us to adjust or near-term sights a little

lower again for the CAD. We continue to forecast a year-end rate of 1.30 (77 USc).

Looking ahead to 2020, we still rather think the CAD has room to improve against the USD. We continue to anticipate some

modest easing from the BoC and the Fed in the next few months, which may widen spreads somewhat against the CAD. But we

remain bearish on the broader outlook for the USD and we think the CAD is fundamentally undervalued, marginally when we factor

in uncertainty generated by President Trump’s economic policies and more obviously so when we factor that uncertainty out. We

estimate fair value, excluding the Trump effect, to be near 1.24 (81 USc); a reduction in trade tensions should be positive for the

CAD. We target 1.25 (80 USc) for end 2020.

Technical factors suggest very strong USD supply is consistently emerging above 1.33 to cap the USD’s gains; we spot key

resistance at 1.3385, the early Sep high. USD support is 1.3190/00; weakness below here should see the USD slide extend

towards 1.3050.

Shaun Osborne, 1.416.945.4538 Foreign Exchange Strategy [email protected]

Spot

5-Dec

AUDCAD 0.90 0.88 0.89 0.89 0.90 0.90 0.91 0.91 0.93

CADJPY 82.7 83.6 84.3 83.3 84.0 82.4 82.4 81.6 81.6

EURCAD 1.46 1.43 1.45 1.45 1.45 1.46 1.48 1.49 1.50

USDCAD 1.32 1.28 1.27 1.26 1.25 1.25 1.25 1.25 1.25

Canadian Dollar Cross-Currency Trends

21Q3fFX Rate 20Q1f 20Q2f 20Q3f 20Q4f 21Q1f 21Q2f 21Q4f

0.87

0.90

0.92

0.95

0.97

1.00

Dec-18 Mar-19 Jun-19 Sep-19 Dec-19

AUDCAD

79.0

81.5

84.0

86.5


CADJPY

1.43

1.46

1.48

1.51

1.53

1.56

1.58


EURCAD

1.29

1.32

1.34

1.37


USDCAD



5

December 5, 2019




United States and Canada Fundamental Commentary

UNITED STATES — With low household debt burdens, robust labour markets, strong wage gains, and solid corporate balance

sheets, the US continues to look like an early-cycle economy even as it continues to march through the 11th year of its longest-

recorded economic expansion. Growth in Q3 was revised upward from 1.9% q/q saar to 2.1% q/q, but this was driven by inventory

stockpiling that was likely induced by anxieties about trade. Overall, our growth projections for 2019–21 have been nudged up

marginally, with slightly higher growth and inflation rates running a bit higher over the 2% target in 2020 and 2021. Nevertheless,

we still expect US growth to continue slowing into 2020 as the boost from 2018’s fiscal stimulus continues to wane and the weight

of policy uncertainty dampens activity. If current levels of uncertainty were alleviated by an end to the Trump trade wars, we project

that average annual real GDP growth during 2019–20 would be another 0.4 percentage points (ppts) higher.

CANADA — Real GDP growth slowed from Q2’s exceptional 3.5% (all growth rates in q/q saar terms) to 1.3% in Q3, matching

most forecasters’ expectations and the Bank of Canada’s own outlook. Historical revisions likely imply that the economy’s output

gap is smaller than previously thought. Domestic demand staged an unexpected resurgence in Q3 by growing 3.2% after a flat

reading in Q2. Every major component of domestic demand saw growth, with a notable revival in business investment from a 5.1%

contraction in Q2 to a 9.0% expansion in Q3. Household consumption expanded by only 1.6%, despite strong hiring and wage

gains at twice headline inflation. Although consumer credit growth has slowed, mortgage borrowing has picked up again, which

helped to fuel a 13.3% Q3 revival in residential investment. Going forward, our projections for Q4 and 2020 are little changed:

trade uncertainty, high household debt, and rising insolvencies are forecast to hold Canada to a modest rebound into next year.

The USMCA is not expected to enter into force until the first half of 2020.

Monetary Policy Commentary

UNITED STATES — Scotiabank Economics expects the Federal Reserve to be close to being done with insurance rate cuts if not

already there. We officially forecast one more cut in 2020H1 with the fed funds target rate range ending 2020 at 1.5-1.75%. The

principal current focus of monetary policy is to offer insurance against downside risks significantly emanating from trade tensions with

the flexibility offered by soft inflation relative to policy goals. The Fed will roll out its framework review early in 2020 and likely formally

embrace average inflation targeting around a symmetrical 2% goal. Symmetry is likely to prove elusive as we forecast core PCE

inflation to avoid any material overshoot of 2% after years of undershooting. Trade policy risks will be evaluated into the new year

alongside the continued disinflationary forces represented by broad dollar strength.

CANADA — Scotiabank Economics continues to forecast a pair of rate cuts over 2020H1. At present the Bank of Canada is leaning

toward a neutral-hawkish sounding bias. Inflation is on target, they are below the neutral rate, the currency is softer than the strong

dollar facing the Fed, the BoC is concerned about financial stability and fiscal policy stimulus may be in the offing.

Several factors may therefore be needed for the Bank to cut. There is a modest amount of slack in the economy and that slack is

likely to widen further given weak growth which could put downward pressure on the inflation target. Wage gains are forecast to slow,

pressuring consumers and inflation. US-centric risks to global trade policy must either continue to disappoint or be marked by modest

progress that may disappoint financial markets. Fiscal stimulus may be modest and have transitory effects that operate with a

significant lag. Housing markets might have to transition toward weaker conditions after being possibly driven by transitory

factors. Strained household finances would have to continue to result in a soft consumer spending profile. Additionally, our currency

strategists remain quite bullish on the C$ going forward and the BoC may wish to lean against the concomitant deterioration in export

competiveness. If the Fed were to ease again, it would undercut the BoC’s policy rate and drive a stronger C$.

Derek Holt, 1.416.863.7707 Scotiabank Economics [email protected]

Brett House, 1.416.863.7463 Scotiabank Economics [email protected]



6

December 5, 2019




G10 Currency Outlook

EUROZONE — Sluggish Eurozone economic growth has checked the euro through 2019 despite a narrowing of the US’ yield

advantage over European debt. At present, EUR downside remains bound by the 1.10 barrier while the 1.12 level also looks like a

tough point to break through for euro upswings. A resolution or détente in the China-US trade dispute, and an unwinding of Brexit

risks, alongside an improving growth outlook in the currency bloc are expected to act as tailwinds for EUR. The threat of US tariffs

on EU goods looms large, however. We expect EURUSD to modestly appreciate through next year to 1.16 by Q4-2020.

UNITED KINGDOM — Sterling has broken through heavy resistance at the height of its 1.28/30 range which followed a mid-Oct

rally where gains were capped as the PM’s Brexit agreement failed to pass through Parliament. GBP recently reached a seven-

month high around 1.31 as election polls point to a Tory majority at the Dec 12 election, and is poised for a clear break out of its

bull flag for a move toward the 1.32 in coming weeks. While an end to the Brexit deadlock will continue to support sterling, GBP

strength may be stifled as the UK and EU enter into trade negotiations with current trade arrangements set to lapse at end-2020.

JAPAN — The yen is on track for a fourth consecutive annual gain against the greenback in 2019—its best streak since the early

90s—as trade uncertainty boosts demand for haven assets while Fed cuts erode the USD’s yield premium. While an expected

détente in the China-US trade war may blunt the yen’s edge, the BoJ is projected to only modestly ease policy through the forecast

horizon against a global wave of looser monetary policy, providing modest support for JPY which we forecast to head to 105 yen

per USD in H2-20.

AUSTRALIA — We expect the AUD to build toward the 70 USc per AUD mark in the next two quarters as the RBA nears the end

of its easing cycle after a cumulative 75 bps reduction to its cash rate since May. The RBA is expected to cut once more in Q1 and

remain on hold for the next two years while it may even hold rates if the country’s economic performance until its next meeting

(Feb) supersedes expectations. A would-be phase one trade deal between China and the US is also set to give a boost to AUD.

Spot

5-Dec

EURUSD 1.11 1.12 1.14 1.15 1.16 1.17 1.18 1.19 1.20

GBPUSD 1.31 1.33 1.34 1.36 1.36 1.38 1.39 1.41 1.42

USDJPY 109 107 107 105 105 103 103 102 102

AUDUSD 0.65 0.69 0.70 0.71 0.72 0.72 0.73 0.73 0.74

FX Rate 20Q1f 21Q3f

Currency Trends

20Q2f 20Q3f 20Q4f 21Q1f 21Q2f 21Q4f

1.08

1.11

1.13

1.16


EURUSD

1.20

1.23

1.26

1.29

1.32

1.35


GBPUSD

104

106

108

110

112

114


USDJPY

0.66

0.68

0.70

0.72

0.74


AUDUSD

Juan Manuel Herrera, 1.416.866.6781 Foreign Exchange Strategy [email protected]



7

December 5, 2019




G10 Fundamental Commentary

EUROZONE — After the drama of this autumn’s efforts by former ECB President Draghi to form a consensus on the Bank’s new

round of easing measures, we do not anticipate any change in the major elements of the ECB’s policy toolkit over our forecast

horizon. Growth is stabilizing in the Eurozone and it’s set for a very modest rise over the next two years. Germany has so far

avoided slipping into a recession with a stronger-than-expected Q3, while France has recorded solid employment gains since

2017. Leading manufacturing indicators appear to have bottomed out and point to some momentum gathering into Q4. Going

forward, we expect to see the effects of the ECB’s accommodative policies filter through to the real economy accompanied by

marginal fiscal stimulus from those countries that have the space to implement it. Renewed industrial unrest in France and ongoing

trade uncertainty form the main risks to our outlook.

UNITED KINGDOM — Our outlook for the UK is substantially unchanged from the forecasts presented in Scotiabank Economics’

Q4 Global Outlook. Regardless of almost any likely result in the December 12 national elections, we continue to project only a

modest acceleration in growth through 2020 and onward into 2021, with inflation remaining around the 2% target across our

forecast horizon. Even with a Conservative majority, Brexit uncertainty will still take years to resolve as the UK’s future relationship

with the EU remains under negotiation. As a result, we do not project an expansion in domestic demand sufficient to offset

meaningfully existing softness in both Europe and the global economy. Despite the Brexit debacle, the UK is still set to avoid a

recession, but underlying momentum remains muted.

JAPAN — The Japanese economy’s near-term outlook remains highly uncertain, reflecting the increase in the consumption tax

rate from 8% to 10% on October 1. The hike is expected to trigger a dip in consumer spending in the final months of 2019; indeed,

October retail sales data show a material drop in households’ purchases in October. According to preliminary estimates, Japan’s

real GDP grew by 0.1% q/q in Q3 following a 0.4% q/q gain in Q2. We expect the economy to expand by 0.6% y/y in 2019–20,

weighed down by simultaneous domestic and external sector challenges. To offset the domestic demand–related weakness, the

government is in the process of unveiling a fresh round of fiscal stimulus, totalling around JPY13 trillion (USD 120 bn). The

package includes an extra budget for the current fiscal year (April-March) as well as additional outlays planned for FY 2020. The

Bank of Japan (BoJ) will likely maintain highly accommodative monetary conditions through 2021. We assess that the likelihood of

the BoJ unveiling further monetary stimulus following its December 19 policy meeting is fairly high. The BoJ will likely consider

various policy options, yet we foresee a 5 bps cut to the policy rate—taking it to -0.15%—as the most likely stimulus step. Japan

will continue to struggle with low inflation over the foreseeable future as global uncertainties weigh on economic growth prospects,

limiting wage growth and demand-driven inflationary pressures. The CPI excl. fresh food—the BoJ’s preferred inflation measure—

currently hovers at 0.4% y/y, far from the central bank’s 2% inflation target.

AUSTRALIA — The Australian economy has shifted to a lower economic growth trajectory on the back of global growth concerns,

weaker international trade dynamics, and softer domestic demand momentum. Real GDP grew by 0.4% q/q in Q3 (1.7% y/y)

following a 0.6% gain in Q2 (1.6% y/y). We expect Australia’s real GDP to expand by 1.9% in 2019, well below the economy’s

potential growth of 2¾%. Only a modest pickup is expected in 2020 with output gains expected to average 2.1% y/y. Australia’s

headline inflation continues to hover below the Reserve Bank of Australia’s (RBA) 2–3% annual inflation target, with prices rising

by 1.7% y/y in Q3 of 2019, yet inflationary pressures have intensified slightly from the Q1 reading of 1.3% y/y. We expect demand-

driven price pressures to remain largely absent through our forecast horizon; headline inflation will likely climb higher only

gradually, reaching the lower end of the RBA’s target range in early 2021. Enabled by low inflationary pressures, the RBA remains

committed to supporting the economy. Following the most recent monetary policy meeting on December 3, the RBA left the

benchmark interest rate unchanged at 0.75% in order to assess the impact of recent rate cuts; the policy rate has been lowered by

a total of 75 bps since June. Nevertheless, RBA Governor Philip Lowe highlighted that the RBA is prepared to ease monetary

policy further if needed. We believe that the central bank will cut the benchmark interest rate one more time in this easing cycle to

0.50%, most likely at its February 2020 policy meeting.

Tuuli McCully, 65.6305.8313 Scotiabank Economics [email protected]

Brett House, 1.416.863.7463 Scotiabank Economics [email protected]



8

December 5, 2019




China, India, Brazil Currency Outlook

CHINA — USDCNY fixing has been set largely in line with market expectations by the PBoC since October 14th, indicating there is

neither deprecation nor appreciation pressure on the yuan right now. The US and China are expected to remain on track to reach

an interim trade deal that could include a currency pact, although US President Donald Trump has signed the Hong Kong bill into

law. We keep our short USDCNH position with an initial target of 6.95.

INDIA — Further economic reforms and stimulus measures will be implemented by the Indian authorities, enhancing foreign

investors’ confidence in the nation with more portfolio inflows. The current levels of the NIFTY share index and the 10Y India

government bond yield both suggest the INR is undervalued, which could be partly explained by persistent rises in India’s foreign

reserves. We maintain our short USDINR position with a target of 70.5 and a stop of 72.5 for higher carry.

BRAZIL — BRL’s August-October stability (4.02 to 4.18) was broken by the pension reform optimism (a move sub-4.0), before

contagion from social unrest across LATAM pushed the cross to a record 4.27. The depreciation prompted aggressive FX

intervention by the BCB (in spot and swaps), which only slowed the rout. Sharp FX depreciation raises the question whether the

BCB will deliver “priced in” 40bps of cuts the coming 2 meetings. Relatively high FX-inflation pass-through (20%-30%), and a 6%

drop in the real the past month is a risk.

Qi Gao, 65.6305.8396 Foreign Exchange Strategy [email protected]

Spot

5-Dec

USDCNY 7.04 6.80 6.80 6.70 6.70 6.60 6.60 6.50 6.50

USDINR 71.3 70.5 70.5 70.0 70.0 69.5 69.5 69.0 69.0

USDBRL 4.21 4.08 4.11 4.07 4.18 4.21 4.24 4.27 4.30

Currency Trends

20Q4fFX Rate 21Q1f 21Q2f 21Q3f20Q1f 20Q2f 20Q3f 21Q4f

3.50

3.70

3.90

4.10

4.30


USDBRL

67.5

69.5

71.5

73.5

75.5


USDINR

6.65

6.80

6.95

7.10


USDCNY

Eduardo Suarez, 52.55.9179.5174 Scotiabank Economics [email protected]



9

December 5, 2019





China, India, Brazil Fundamental Commentary

CHINA — The US-China trade conflict continues, causing fluctuations in global risk sentiment. The two countries are approaching

a “phase-1” deal, yet it remains unclear whether the deal would lead to a rollback of existing tariffs and hence a sustainable

improvement in the global economic outlook. We highlight that until the deal is signed, there is an elevated risk of a policy reversal

by either party. We note that both the US and China need the phase-1 deal given the approaching presidential election in the US

and downward pressure on their economies. Accordingly, we expect that a deal will be reached within the next few months, yet

strained US-China relations, particularly on the technology front, will likely stay in place for an extended period of time. We expect

Chinese real GDP to grow by 6.1% in 2019 and 6.0% 2020, yet risks are tilted to the downside. Inflationary pressures have

intensified in China on the back of higher food prices. Headline inflation climbed to 3.8% y/y in October, exceeding the

government’s target of around 3% y/y. We expect consumer price inflation to close the year at slightly over 4% y/y. Nevertheless,

price pressures further up the distribution chain are non-existent, with annual producer price inflation currently residing in negative

territory (-1.6% y/y in October). As the uptick in headline inflation does not reflect demand-driven price pressures, the People’s

Bank of China (PBoC) will likely see through it and maintain an accommodative monetary policy stance in the foreseeable future.

The PBoC has rolled out additional monetary stimulus by guiding interest rates gradually lower. On November 20, the new

benchmark lending rate, the 1-year Loan Prime Rate (LPR) was set at 4.15%, 5 bps lower from the month before. Similarly, the

interest rates on the central bank’s lending facility and reverse repo operations were lowered in November. While the PBoC is

taking small steps with the interest rate cuts, the central bank has highlighted that it will “increase counter-cyclical adjustment” to

ease downward pressure on the economy, marking a clear shift in the guidance. We expect another 5 bps cut to the LPR to be

implemented in December.

INDIA — India’s current economic growth performance is soft, highlighting the need for continued fiscal and monetary stimulus

efforts by the country’s policymakers. Real GDP grew by only 4.5% y/y in Q3—the slowest pace since early-2013—reflecting

muted consumer spending and fixed investment growth. Following the weaker-than-expected third quarter data, we have revised

lower our growth forecasts for India and expect real GDP to expand by 5.1% y/y in 2019 (vs. the earlier forecast of 5.8%). We

forecast growth to recover to 6.7% y/y in 2020–21, yet it is set to remain below the economy’s estimated potential growth of 7–

7½%. India’s headline inflation accelerated to a 16-month high of 4.6% y/y in October, surpassing the midpoint of the RBI’s annual

inflation target of 4% ±2%. The pickup was largely due to a surge in food prices that reflects an erratic monsoon rainfall.

Nevertheless, core inflation remains contained (the core CPI eased to 3.4% y/y in October) on the back of weak demand-driven

price pressures. Against expectations, the Reserve Bank of India (RBI) left the benchmark interest rate unchanged at 5.15%

following the December 5 monetary policy meeting. The benchmark repo rate had been reduced in five consecutive monetary

policy meetings by a total of 135 basis points between February and October. Nevertheless, the central bank maintained its

accommodative monetary policy stance. Monetary authorities pointed out that the RBI’s main objective is inflation-targeting;

accordingly, they would like to have greater clarity on inflationary developments before stimulating the economy further. Moreover,

they expect the prior cuts to continue to be transmitted into lower lending rates. Given weak economic growth momentum and

transient inflationary pressures, we expect the RBI to cut the benchmark interest rates at the next policy meeting in February 2020.

BRAZIL — Brazil news have been mixed in recent weeks, with absent social unrest (a problem across the region) being a strong

point. In addition, pension reform and continued commitment by the government to fiscal reform, further round up the positives. On

the flip side, growth remains anemic: industrial production +1.1% y/y for September (consensus +1.5% y/y), PMIs slowing in

October, and retail sales at a modest +2.1% y/y in September. Consistent with weak growth, the latest IPCA inflation came in near

the bottom of the BCB’s target range (first half of November +2.67Y y/y). Subdued growth and inflation argue for the central bank

to continue easing rates, but a historically low Selic rate risks compromising BRL stability in a country where FX-inflation pass-

through is relatively high (20-30%). With monetary policy acting with a lag, cutting too far risks un-anchoring the BRL as political

risk could escalate. During 2020, Brazil will hold elections for local governments (all mayors), meaning politics could turn more

complex for ratifying the much needed fiscal reform. Reinforcing political uncertainty is the exit of former President Lula from

prison. At this point in time its unclear what Lula’s exit means. On one hand, he could serve as a unifying force for left leaning

opposition, potentially making matter more complex for a government whose popularity is weak (about 40% approval vs rejection

rates near 50%). On the flip side of that, it can be argued that with Lula unifying the left, and being relatively “institutional”, the risks

of unpredictable unrest actually drop. The bottom line is that we fear political uncertainty for 2020 is on the rise, which can have an

impact on inflation (through the FX channel), as well as on reform momentum.

Eduardo Suarez, 52.55.9179.5174 Scotiabank Economics [email protected]

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10

December 5, 2019




Pacific Alliance Currency Outlook

MEXICO — Uncertainty and volatility are expected to maintain the FX under some pressure in the coming months. On the external

side, risk aversion promoted by US-China trade tensions and Latam social unrest continue to negatively influence flows to

emerging markets. On the domestic side, the large debt holdings by foreign investors makes the FX rate susceptible to volatility

arising from the USMCA delay, possible actions from rating agencies and a more relaxed stance on the monetary policy front.

COLOMBIA — According to models, Colombian traditional fundamentals put USDCOP at around 3250-3320 due to structural twin

deficits that are well financed. However, models adding Latam risk, point to higher levels (~3400). Spot currency has depreciated

more than models suggest, on the back of atypical Latam risk aversion, and what we call financial pressures through the effect of

some trust funds than can’t reduce exposure to Argentina due to capital controls and who instead have to reduce exposure in the

rest of Latam. We think financial pressures will continue, although at a lower scale. We increased Dec-19 forecast to 3310 from

3120. Next year USDCOP will continue hovering around the same levels.

CHILE — The Chilean peso hit historical lows as social outbreak damages activity and confidence levels, leading the Central Bank

to intervene in the FX market. Additionally, an extension of the trade war keeps global demand subdued. However, according to

our models, current level (around USDCLP800) shows a misalignment with respect to its fundamentals. We acknowledge the risks

from local activity and the trade war, and we delay the convergence to equilibrium by 2020, but we still forecast an appreciation of

the peso in the coming months.

PERU — We are maintaining our FX forecasts (3.35 for year-end 2019, and 3.42 for 2020), although the PEN is under more

pressure than expected for this time of year, in line with regional currencies, and local business events. Despite rather strong

offshore flows, the PEN has fluctuated in a narrow 3.28 to 3.40 range throughout the year. However, the Central Bank appears to

be more tolerant of a PEN rising above 3.40 henceforth and into 2020.

Spot

5-Dec

USDMXN 19.38 20.84 20.97 21.16 21.23 21.47 21.28 21.34 21.65

USDCOP 3454 3295 3237 3258 3250 3233 3215 3198 3180

USDCLP 784 780 770 760 750 730 720 710 700

USDPEN 3.38 3.40 3.38 3.43 3.42 3.40 3.38 3.34 3.35

Currency Trends

FX Rate 21Q2f 21Q3f20Q1f 20Q2f 20Q3f 20Q4f 21Q1f 21Q4f

Mario Correa

52.55.5123.2683 Scotiabank Mexico [email protected]

Carlos Muñoz

56.2.2939.1026 Scotiabank Chile [email protected]

Sergio Olarte

57.1.745.6300 Scotiabank Colombia [email protected]

Guillermo Arbe

511.211.6052 Scotiabank Peru [email protected]

2,950

3,150

3,350

3,550


USDCOP

3.27

3.31

3.35

3.39


USDPEN

17.95

18.95

19.95

20.95


USDMXN

640

690

740

790

840


USDCLP



11

December 5, 2019




Pacific Alliance Fundamental Commentary

MEXICO — Mexico continued to exhibit stagnation signs in an environment of lower inflation. Economic activity is expected to

barely grow in 2019, as we estimate 0.2% GDP growth, meanwhile our 2020 growth forecast holds at 1.0%. Economic activity has

sharply decelerated more than previously expected, driving Banco de Mexico and market consensus to downwardly adjust their

2019 estimates to a range of -0.2 and 0.2%, in the first case, and to 0.04%, in the second. Broadly, in August 2019 n.s.a

consumption printed its worst growth rate in six years (-0.5% y/y) and investment recorded its seventh consecutive contraction

(-4.3% y/y), in real terms. The s.a. GDP of Q3-2019 exhibited no quarterly growth, but Q2-2019 figure was revised downward to

-0.1% q/q, industrial production growth remained in negative ground for an eleventh consecutive month (-1.8% y/y), and

cumulative twelve month job creation decelerated to 1.8% y/y, its lowest pace in nine years. These economic indicators have not

shown any sign of improvement and others in fact suggest further impasse, such as the trade balance, in which October’s exports

dropped 1.5% y/y and imports shrank 6.4% signaling that production, consumption, investment and auto sector will remain weak

during the last quarter of the year. Mainly, because auto sector exports fell 6.2% y/y, imports of consumption and capital goods

plunged 2.4% and 13.1%, respectively. Nonetheless, headline inflation hit Banxico’s target in September and has remained around

there (+3.0%) for two months in a row; also Banxico’s Board has cut the benchmark rate by 25 basis points in three consecutive

times and is expected to do so at the December meeting, leaving target’s interest rate at 7.25% by year end.

COLOMBIA — Q3-2019 GDP growth consolidated Colombia as a PAC’s country with the highest growth this year, although still

with a negative output gap. Economic activity grew 3.3% in Q3 well above last year’s (2.6%). Domestic demand has steadily grown

above GDP over the previous seven quarters due to higher private consumption and recently better investment. Low interest rates,

especially consumption rates, steady FDI and civil works (4G infrastructure program) will continue to support domestic demand in

4Q-2019 and 2020. We keep our FY19 GDP growth forecast of 3.2% and 3.6% next year. In the fiscal arena, recent protests

should put some pressure on next year’s fiscal budget. Fiscal reform 2.0 although is highly probable that passes through congress,

it’ll pass a water down version due to, again, recent strong protests. In the meantime, Fitch ratified Colombia’s “BBB” rating

(negative outlook) but also said that depending on what happens with the nationwide protests and how the fiscal budget could be

affected, they could revise the rating earlier. On inflation, FX depreciation pass-through continues to be timid and supply shock in

foodstuff prices has made headline inflation to pick up to 3.8%. We think supply shock will vanish fairly quick next year. The good

news is that core inflation measures are still very close to 3%. Gradual economic activity recovery and temporary inflation pick up

will keep BanRep on the sidelines and keep the policy rate at 4.25% for the rest of the year, and possibly deliver a hike of 25bps in

H1-2020.

CHILE — Social unrest led us to adjust our growth forecast for 2019 and 2020 to 1.0% and 1.4% respectively (from a previous

2.7% and 3.2%). We estimate a negative impact on medium-term growth due to a reduction in working hours, disruptions in

services and a drop in confidence indicators (business and consumers). Destruction and looting have also taken a toll on

infrastructure, adding up to 1,400 MM USD in damages. Retail and Subway (Metro) have been the most affected. On the other

hand, we adjust downward our investment forecast to 3.8% and 4% for 2019 and 2020, respectively, acknowledging an impact

from October outbreak. However, ongoing investment projects continue to increase, and we still forecast a recovery in the second

half of 2019, as most projects are under construction and cannot be postponed. Regarding household consumption, it had been

decelerating due to higher precautionary savings in the past months. We anticipate a deepening of this behavior due to the

setback in confidence indicators and the negative effect of real depreciation of the Peso after O18. In this sense, we forecast

inflation for December 2019 at 3.1% y/y and 2.6% y/y for 2020, reaching 3.5% y/y during the first quarter of 2020. The stabilization

of copper prices will only mitigate the punishment on Chilean financial assets resulting from political instability. We expect the

Central Bank to favor the widening of the output gap, lowering the monetary policy rate toward 1.0% by mid-2020.

PERU — GDP growth in the third quarter, 3.0%, was an improvement over 1.2% in Q2 and 2.4% in Q1, despite a business

environment afflicted by corruption investigations and political events. We expect 2.5% growth in Q4, a bit softer than Q3 only due

to a higher base comparison. Domestic demand, up 4.1% in Q3, improved significantly -and surprisingly- versus Q2: 1.9%, and

Q1: 1.5%. Private consumption growth, 3.3%, was par for the course. The real upbeat numbers came from private investment

growth, up 7.1%, and government spending (non-investment), up 6.6%. We’re seeing signs that both will soften in Q4, but,

hopefully, the trends will resume in Q1-2020 for both, as it will set the tone for the whole year. The Central Bank lowered the

reference rate in November to 2.25%, surprising us in terms of timing. The CB hasn’t given clear signals of its next move. But, the

economy is underperforming CB expectations, and the CB has shown concern over the investment environment. With inflation

hovering under 2%, there is only a little room for another rate cuts before the real rate turns negative, so we expect only one more

cut, to 2.0%, to occur in Q1-2020. This is the only change to our 2019 and 2020 forecasts. The fiscal deficit to October was 1.6%

of GDP, and is likely to come in at or below our 2% full-year forecast.

Mario Correa

52.55.5123.2683 Scotiabank Mexico [email protected]

Sergio Olarte

57.1.745.6300 Scotiabank Colombia [email protected]

Waldo Riveras

56.2.2939.1495 Scotiabank Chile [email protected]

Guillermo Arbe

511.211.6052 Scotiabank Peru [email protected]



12

December 5, 2019




Developing Economies Currency Outlook

SOUTH KOREA — The BoK left its policy rate unchanged at 1.25% on 29 November, while keeping the door open to additional

policy easing. The arrival of the 5G era will boost South Korea’s exports on chip recovery next year, while the nation’s shipbuilders

are bracing for a rebound on strong demand for high value-added LNG ships. We stay with our short JPY/KRW cross positions

targeting 10.4 on hopes for USD/KRW to head for 1,160 in the months ahead.

THAILAND — The Thai government has rolled out further stimulus measures worth of about THB 144bn to spur full-year

economic growth. The BoT said in the minutes of its November 6 meeting that the MPC remains concerned about the baht

appreciation, indicating more counter measures on the cards. While USD/THB is expected to trade in a range of 30.0-30.5 in

December, we maintain our short THB/KRW cross position with an initial target of 38.0.

TAIWAN — The TWD is expected to benefit further from continued capital inflows including 1) equity investment; 2) more

investment by local firms returning from mainland China amid the US-China trade disputes and; 3) increasing remittances due to

the passage and implementation of the Act on the Use and Taxation on the Inward Remittance of Overseas Funds. USD/TWD is

likely to head for 30.4 with a 30.6 resistance in December.

MALAYSIA — The BNM’s 50 bp SRR Ratio cut will boost local equities and bonds if external uncertainties fade away. In the

meantime, crude oil prices have been in "backwardation" that could lead to higher oil prices in the future. Both would prop up the

MYR in the months ahead, together with a potential CNH strength. We keep our short USD/MYR position with a new target of 4.12

and a stop of 4.20.

Qi Gao, 65.6305.8396 Foreign Exchange Strategy [email protected]

Spot

5-Dec

USDKRW 1190 1160 1160 1140 1140 1120 1120 1100 1100

USDTHB 30.4 30.1 30.1 30.0 30.0 29.9 29.9 29.8 29.8

USDTWD 30.5 30.2 30.2 30.0 30.0 29.8 29.8 29.6 29.6

USDMYR 4.17 4.05 4.05 4.00 4.00 3.95 3.95 3.90 3.90

Currency Trends

FX Rate 20Q1f 20Q2f 20Q3f 21Q2f 21Q3f20Q4f 21Q1f 21Q4f

1100

1130

1160

1190

1220

1250


USDKRW

30.0

30.9

31.7

32.6

33.4

Dec-18 Feb-19 Apr-19 Jun-19 Aug-19 Oct-19 Dec-19

USDTHB

30.3

30.6

30.8

31.1

31.3

31.6


USDTWD

1.34

1.35

1.36

1.37

1.38

1.39

1.40


USDMYR



13

December 5, 2019




Developing Economies Fundamental Commentary

SOUTH KOREA — The Bank of Korea (BoK) will likely keep the benchmark interest rate unchanged at 1.25% over the next few

months as it assesses the impact of its recent 25 bps cuts in July and October. Nevertheless, BoK Governor Lee Ju-yeol has

noted that the central bank has room for further policy action if needed. Developments on the trade front will play a key role in

future policy decisions as the South Korean economy continues to feel the adverse impact of trade-related challenges. We expect

that fiscal policy will become more growth-supportive over the coming months, complementing the central bank’s monetary

stimulus efforts. Against the backdrop of economic weakness, inflationary pressures remain absent in South Korea (CPI inflation

was 0.2% y/y in November), allowing for loose monetary conditions. We do not expect annual headline inflation to reach the BoK’s

2% target before 2021. The export-oriented South Korean economy grew by 0.4% q/q (2.0% y/y) the third quarter, following a

1.0% q/q (2.0% y/y) gain in Q2. Household spending and fixed investment momentum weakened, implying that external sector

challenges are spilling over to domestic demand. We forecast South Korea’s real GDP to grow by only 1.8% in 2019, followed by a

mild recovery to 2.3% y/y in 2020–21.

THAILAND — The Bank of Thailand (BoT) is stepping up its efforts to support the economy as downside pressures on growth

intensify. Following the November 6 Monetary Policy Committee Meeting, the BoT lowered the benchmark interest rate by 25 basis

points to 1.25%. The policy rate was lowered by the same magnitude in August. We anticipate another rate cut to 1.0% in the first

quarter of 2020. Monetary authorities pointed out that the Thai economy will face higher risks over the coming months, as trade

tensions and a slowdown in China will adversely impact the country’s export sector while weaker income and employment

conditions will dampen consumer spending prospects. Meanwhile, inflationary pressures are expected to remain below the lower

bound of the BoT’s 1–4% annual inflation target. Indeed, headline inflation stood at 0.2% y/y in November. Thailand’s real GDP

grew by 2.4% y/y in the third quarter of the year, following a 2.3% gain in the April-June period. Nevertheless, in quarter-over-

quarter terms, expansion decelerated to 0.1% q/q from 0.4% in Q2. Public outlays provided support to growth while consumer

spending momentum softened. We estimate that Thailand’s output gains will average 2.4% y/y in 2019, followed by a 2.1% and

2.7% gain in 2020 and 2021, respectively.

TAIWAN — The export-oriented Taiwanese economy is affected by weaker global momentum and persisting trade uncertainties.

Reflecting exporters’ challenges, manufacturing sector sentiment remains soft, yet it has recovered somewhat over the past few

months. Real GDP grew by 3.0% y/y in Q3 2019 following a 2.6% gain in the prior quarter. Stable labour market conditions

continued to support consumer spending. Net exports contributed to growth on the back of contracting imports. We expect

Taiwan’s real GDP to grow by 2¼% y/y in 2019 followed by a 2.0% advance in 2020. The Taiwanese central bank will make an

interest rate decision on December 19. At its September policy meeting, the benchmark interest rate was left unchanged at

1.375%. Monetary authorities assess that Taiwan’s inflation outlook is stable while the economy’s marginal negative output gap

will remain in place in 2019 and 2020. The US-China trade developments will play a key role in determining Taiwan’s monetary

policy trajectory. While we expect the central bank to keep the policy rate on hold in December, it is possible that modest monetary

easing will materialize in early 2020. Inflation remains low in Taiwan, with headline prices rising by 0.6% y/y in November.

MALAYSIA — Demand-driven price pressures remain absent in Malaysia, allowing the Bank Negara Malaysia (BNM) to maintain

its accommodative monetary policy stance over the foreseeable future. Nevertheless, inflation has intensified slightly, reflecting the

lapse of the impact of the abolishment of the Goods and Services Tax in June 2018. In October, headline CPI rose by 1.1% y/y vs.

the May figure of 0.2% y/y when the base affect was still at play. We expect the headline inflation rate to close 2019 at 1⅓% y/y.

Following the most recent monetary policy meeting on November 5, the BNM left the Overnight Policy Rate unchanged at 3.0%.

We expect the central bank to keep the benchmark interest rate on hold in the near term as monetary authorities assess the health

of domestic and global economic growth momentum and the need for further policy support. We assess that the BNM may cut the

policy rate one more time in Q1 2020. The key interest rate was lowered by 25 bps in May, marking the first cut since July 2016

and reversing the January 2018 hike. Malaysia’s real GDP grew by 4.4% y/y in Q3 2019, following a 4.9% gain in the prior quarter.

In quarter-over-quarter terms, output expanded by 0.9%. Activity was driven by household and public spending. Domestic demand

will continue to support the economy over the coming quarters, while the external sector will remain adversely affected by weaker

global growth, the supply chain ripple effects of the ongoing trade tensions between the US and China, as well as the downturn in

the global electronics sector. We expect Malaysian real GDP gains to average 4.4% y/y in 2019 and 4⅓% in 2020–21.




14

December 5, 2019




Global Currency Forecast (end of period)

2019f 2020f 2021f

Major Currencies Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Japan USDJPY 108 105 102 108 107 107 105 105 103 103 102 102

Euro zone EURUSD 1.11 1.16 1.20 1.11 1.12 1.14 1.15 1.16 1.17 1.18 1.19 1.20

EURJPY 120 122 122 120 120 122 121 122 121 122 121 122

UK GBPUSD 1.31 1.36 1.42 1.31 1.33 1.34 1.36 1.36 1.38 1.39 1.41 1.42

EURGBP 0.85 0.85 0.85 0.85 0.84 0.85 0.85 0.85 0.85 0.85 0.84 0.85

Switzerland USDCHF 0.99 0.97 0.96 0.99 1.00 0.98 0.98 0.97 0.97 0.96 0.97 0.96

EURCHF 1.10 1.13 1.15 1.10 1.12 1.12 1.13 1.13 1.13 1.13 1.15 1.15

Americas

Canada USDCAD 1.30 1.25 1.25 1.30 1.28 1.27 1.26 1.25 1.25 1.25 1.25 1.25

CADUSD 0.77 0.80 0.80 0.77 0.78 0.79 0.79 0.80 0.80 0.80 0.80 0.80

Mexico USDMXN 20.71 21.23 21.65 20.71 20.84 20.97 21.16 21.23 21.47 21.28 21.34 21.65

CADMXN 15.93 16.98 17.32 15.93 16.28 16.51 16.79 16.98 17.18 17.02 17.07 17.32

Brazil USDBRL 4.18 4.18 4.30 4.18 4.08 4.11 4.07 4.18 4.21 4.24 4.27 4.30

Chile USDCLP 780 750 700 780 780 770 760 750 730 720 710 700

Colombia USDCOP 3310 3250 3180 3310 3295 3237 3258 3250 3233 3215 3198 3180

Peru USDPEN 3.35 3.42 3.35 3.35 3.40 3.38 3.43 3.42 3.40 3.38 3.34 3.35

Asia-Pacific

Australia AUDUSD 0.68 0.72 0.74 0.68 0.69 0.70 0.71 0.72 0.72 0.73 0.73 0.74

China USDCNY 6.90 6.70 6.50 6.90 6.80 6.80 6.70 6.70 6.60 6.60 6.50 6.50

Hong Kong USDHKD 7.82 7.80 7.80 7.82 7.80 7.80 7.80 7.80 7.80 7.80 7.80 7.80

India USDINR 71.0 70.0 69.0 71.0 70.5 70.5 70.0 70.0 69.5 69.5 69.0 69.0

Indonesia USDIDR 14200 13800 13400 14200 14000 14000 13800 13800 13600 13600 13400 13400

Malaysia USDMYR 4.10 4.00 3.90 4.10 4.05 4.05 4.00 4.00 3.95 3.95 3.90 3.90

New Zealand NZDUSD 0.65 0.67 0.69 0.65 0.66 0.66 0.67 0.67 0.68 0.68 0.69 0.69

Philippines USDPHP 51.5 50.0 48.0 51.5 51.0 51.0 50.0 50.0 49.0 49.0 48.0 48.0

Singapore USDSGD 1.37 1.35 1.33 1.37 1.36 1.36 1.35 1.35 1.34 1.34 1.33 1.33

South Korea USDKRW 1180 1140 1100 1180 1160 1160 1140 1140 1120 1120 1100 1100

Taiwan USDTWD 30.4 30.0 29.6 30.4 30.2 30.2 30.0 30.0 29.8 29.8 29.6 29.6

Thailand USDTHB 30.2 30.0 29.8 30.2 30.1 30.1 30.0 30.0 29.9 29.9 29.8 29.8

f : forecast a: actual

2021f2020f2019f



This report has been prepared by Scotiabank Economics as a resource for the clients of Scotiabank. Opinions, estimates and projections

contained 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

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trading strategy involving a swap or any other transaction. The information contained in this report is not intended to be, and does not

constitute, a recommendation of a swap or trading strategy involving a swap within the meaning of U.S. Commodity Futures Trading

Commission Regulation 23.434 and Appendix A thereto. This material is not intended to be individually tailored to your needs or characteristics

and should not be viewed as a “call to action” or suggestion that you enter into a swap or trading strategy involving a swap or any other

transaction. Scotiabank may engage in transactions in a manner inconsistent with the views discussed this report and may have positions, or

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December 5, 2019




SCOTIABANK ECONOMICS

Brett House

[email protected]

Tuuli McCully

[email protected]

Derek Holt

[email protected]

Eduardo Suarez

[email protected]

Guillermo Arbe

Scotiabank Peru

[email protected]

Mario Correa

Scotiabank Mexico

[email protected]

Carlos Muñoz

Scotiabank Chile

[email protected]

Sergio Olarte

Scotiabank Colombia

[email protected]



Foreign Exchange Strategy

This publication has been prepared by The Bank of Nova Scotia (Scotiabank) for informational and marketing purposes only. Opinions,

estimates and projections contained 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

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swap or trading strategy involving a swap or any other transaction. The general transaction, financial, educational and market information

contained herein is not intended to be, and does not constitute, a recommendation of a swap or trading strategy involving a swap within the

meaning of U.S. Commodity Futures Trading Commission Regulation 23.434 and Appendix A thereto. This material is not intended to be

individually tailored to your needs or characteristics and should not be viewed as a “call to action” or suggestion that you enter into a swap or

trading strategy involving a swap or any other transaction. You should note that the manner in which you implement any of the strategies set

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™ Trademark of The Bank of Nova Scotia. Used under license, where applicable. Scotiabank, together with “Global Banking and Markets”, is a

marketing name for the global corporate and investment banking and capital markets businesses of The Bank of Nova Scotia and certain of its

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Scotiabank Europe plc is authorised by the UK Prudential Regulation Authority and regulated by the UK Financial Conduct Authority and the

UK Prudential Regulation Authority. Details about the extent of The Bank of Nova Scotia's regulation by the UK Prudential Regulation Authority

are available on request. Scotiabank Inverlat, S.A., Scotia Inverlat Casa de Bolsa, S.A. de C.V., and Scotia Inverlat Derivados, S.A. de C.V.,

are each authorized and regulated by the Mexican financial authorities. Not all products and services are offered in all jurisdictions. Services

described are available in jurisdictions where permitted by law.

December 5, 2019




FOREIGN EXCHANGE STRATEGY

Shaun Osborne

[email protected] Qi Gao

[email protected]

Juan Manuel Herrera

[email protected]



GLOBAL ECONOMICS & FX STRATEGY | FOREIGN EXCHANGE …...In Europe, a way out of the Brexit imbroglio may emerge from the UK general election. The British pound (GBP) rose sharply in

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