Outlook for the Major Global Currencies - Joseph Capurso, Currency Strategist, Commonwealth Bank of Australia

1. 11
ANZIIF 2010 Liability Conference
Over the horizon
What’s in store for currency markets?
Prepared by: Joseph Capurso, Currency strategist
Date: March 2010

2. 22
Important Information
This advice has been prepared without considering your objectives, financial situation or needs, and
before acting on the advice, you should consider its appropriateness to your circumstances.
Commonwealth Bank of Australia (“CBA”) as a provider of investment, borrowing and other financial
services undertakes financial transactions with many corporate entities in Australia. This may include
any corporate issuer referred to in this report.
For US and US investors: If you would like to speak to someone regarding the subject securities or
issuer(s) described in this report, please contact Commonwealth Australia Securities LLC (“CAS”), a
broker-dealer registered under the U.S. Securities Exchange Act of 1934 (the “Exchange Act”) and a
member of The Financial Industry Regulatory Authority, ( “FINRA”) at 1 (212) 848-9307. This report
was prepared, approved, published, and distributed in the USA by Commonwealth Australia Securities
LLC (“CAS”). CBA is not registered as a broker-dealer under the Exchange Act and is not a member of
the FINRA or any U.S. self-regulatory organization. Please see further disclaimers at the back of this
document.
Please also view our website at www.research.commbank.com.au for a more detailed disclaimer.

3. 33
Road Map
 Our view…………………..………………………………….3
 AUD…………………………………………………………...9
 Hedging………………………………………………………15
 The USD……………………………………………………..19
 Cross rates…………………………………………………..29

4. 4
Our economic view
 Global economy is recovering
– China and Australia leading the economic recovery
– US looking strongest among the big advanced economies
– Eurozone at risk of ‘double dip’
– UK has the potential to give a positive surprise this year
 Economic policy is shifting away from “emergency” levels
– RBA to be first to raise rates to ‘normal’
– Major central banks to tighten in HII 2010, but rates to remain low
– Government debt to be major focus for markets

5. 5
Our FX view
 USD recovery has just started
– US economic recovery supports a firmer USD
– Better global economy encourages offshore US investment
– Federal Reserve commitment to keep interest rates low preventing
stronger USD, for now
 Upside to AUD limited
– Investor risk appetite ‘waxing and waning’
– Interest differentials are wide but not much more upside
– Global recovery supporting commodity prices but Europe is a concern
– Australian assets (AAA bonds & commodities) are attractive

6. 6
Our FX view
 NZD has some further upside
– Current soft patch is unlikely to last
– NZ’s small open economy is responding to global improvements
– AUD/NZD to edge lower as global economy improves and Reserve Bank
of New Zealand tightens
 EUR lower on weak economic data and concerns about government debt
– Risk of “double dip” recession
 GBP has potential for upside surprise
– Large fall in UK TWI is a competitive depreciation; benefits to flow
– UK economy showing signs of a faster improvement than Europe
– BoE to change current bearish view

7. 7
Our FX view
 JPY to weaken as global economy improves
– Current strength in JPY reflects risk aversion and low real yields
– USD/JPY to rise when US yields rise
– Better global economy & market stability lead to Japanese offshore
investment
– Japan likely to be the last of G-7 economies to recover to pre-crisis levels
 Asian EM FX strength to persist until Fed tightens
– Asian region absent large bank problems
– Consensus forecasts for Asian growth on the way up
– Asia has support of cyclical improvement in China’s economy
– Current account surpluses limit depreciation

8. 8
Our FX view
Jun-10 Sep-10 Dec-10 Mar-11
AUD 0.88 0.87 0.85 0.82
EUR 1.38 1.35 1.35 1.32
NZD 0.70 0.72 0.71 0.68
GBP 1.65 1.63 1.64 1.64
JPY 95 96 98 100
CAD 1.06 1.05 1.08 1.12
CHF 1.06 1.08 1.10 1.10
CNY 6.81 6.78 6.75 6.67
End period

9. 9
Our FX view
Jun-10 Sep-10 Dec-10 Mar-11
AUD-USD 0.88 0.87 0.85 0.82
AUD-EUR 0.64 0.64 0.63 0.62
AUD-NZD 1.26 1.21 1.20 1.21
AUD-GBP 0.53 0.53 0.52 0.50
AUD-JPY 84 84 83 82
AUD-CAD 0.93 0.91 0.92 0.92
AUD-CHF 0.93 0.94 0.94 0.88
AUD-CNY 5.99 5.90 5.74 5.51
End period

10. 10
AUD
How did we go?
0.50
0.60
0.70
0.80
0.90
Mar-09 Jun-09 Sep-09 Dec-09
WHAT HAPPENED ONE YEAR AGO?
(end of quarter)
Consensus
CBA
Outcome
USD
*Spot at time
of forecast

11. 11
CBA and the Consensus
 We are less optimistic than Consensus – first time in several years.
 We revised down our forecasts – first time since October 2008.
0.75
0.80
0.85
0.90
0.95
1.00
Mar-10 Sep-10 Mar-11 Sep-11
CBA V CONSENSUS: AUD/USD
CBA
Consensus
0.60
0.70
0.80
0.90
1.00
1.10
0.60
0.70
0.80
0.90
1.00
1.10
Mar-08 Mar-09 Mar-10 Mar-11
CBA AUD FORECASTS
(end quarter)
Market price
May 2009
March 2009
Feb. 2010
Oct. 2009
USD USD
AUD

12. 1212
AUD
0.40
0.60
0.80
1.00
1.20
0.40
0.60
0.80
1.00
1.20
1/3/83 27/2/89 26/2/95 24/2/01 23/2/07
AUD SINCE THE FLOAT
Banana
Republic
(1986)
Sub-prime
(2007-08)
USDUSD
Fed
hikes
rates
(1984)
Asia
crisis (1997)
Tech
bust
(2001)
A foreign affair

13. 13
What moves the AUD?
 Trends in the USD against major currencies
– Fed has outlined its ‘exit strategy’, now for implementation
– Concerns about government debt in eurozone helping USD
 Interest rate spreads
– RBA among first to raise rates – more to come, but gradual
– US Federal Reserve to reduce liquidity then raise rates
 Commodity prices
– global economy improving, led by China
AUD

14. 14
Reality check
 The currency is at extreme
levels against a range of
currencies.
 We expect this strength to
wane over the next year.
0
10
20
30
40
AUD/USD AUD/NZD AUD/GBP AUD/EUR
ABOVE AVERAGE
%
Currently 24%
above average
Forecast to be
11% above
average
AUD
AUD/USD AUD/NZD AUD/GBP AUD/EUR
Current 0.92 1.30 0.61 0.67
Average 0.74 1.22 0.46 0.60
Mar-11 0.82 1.21 0.50 0.62

15. 15
 USD strengthens as US economy improves.
– looming mortgage resets.
 Downward revisions to 2010 global growth.
– Europe is the weak spot.
 US & European equity markets fall by >20%.
 China’s economic growth stalls (commercial
property).
 Australia’s recovery unexpectedly falters.
The Big Five
Weighted risk of occurrence
40%
25%
20%
x
10%
x
5%
AUD

16. 16
Volatility
 AUD is a volatile currency.
– Very sensitive to global
financial market moves.
 13 US cent trading range in an
“average” year – 31 US cents
in 2009.
 Implied volatility in options is
coming down. Unlikely to
return to lows seen pre-GFC
now that risk is more
appropriately priced.
Our FX View
5
10
15
20
25
5
10
15
20
25
Mar-05 Mar-07 Mar-09
IMPLIED VOLATILITY
(12 months)
%pa
AUD/USD
AUD/EUR
%pa

17. 17
 Funds have increased hedging by more than corporates.
Hedging benchmarks
Hedging
0
15
30
45
60
Exports Imports
CHANGES TO CORP. BENCHMARK*
(% of contributors)
Increased
Decreased
* in last two years
0
15
30
45
60
Equity assets Debt owned
CHANGES TO FUNDS BENCHMARK*
(% of contributors)
Increased
Decreased
* in last two years

18. 18
 Funds hedge more FX risk than corporates.
Hedging policy
Hedging
0
20
40
60
80
Equity assets Debt owned Debt owed
HEDGING POLICY OF FUNDS
(% of exposure)
Fully hedged
Partially hedged
0
20
40
60
80
Exports Imports
HEDGING POLICY OF CORPORATES
(% of exposure)
Fully hedged
Partially hedged

19. 19
 Funds are more pro-active (FX forecasts more influential) than
corporates.
Influences on hedging benchmarks
Hedging
0
25
50
75
100
Equity assets Debt owned
INFLUENCES ON BENCHMARK: FUNDS
(% of contributors)
Recent FX trends
FX forecasts
Other
0
25
50
75
100
Exports Imports
INFLUNCES ON BENCHMARK: CORP.
(% of contributors)
Recent FX trends
FX forecasts
Other

20. 20
The USD
US winning the beauty contest
 USD is rising because its
economy is recovering ahead
of other large advanced
economies.
90
95
100
105
90
95
100
105
Mar-08 Mar-09 Mar-10
LEVEL OF GDP
(index Sept. 2008 =100)
Pts Pts
Japan
US
Europe
UK
Lehman collapse

21. 21
Inventory rebuild
 Economic recoveries often
start with inventory rebuild.
 The inventory cycle has only
just begun.
The USD
1.0
1.2
1.4
1.6
1.8
Jan-95 Jan-00 Jan-05 Jan-10
USA: INVENTORY SALES RATIO
Times

22. 22
Housing recovery
 The overhang of homes is
being wound down.
 US housing construction is
recovering — financed by
banks!
-12
-6
0
6
12
-12
-6
0
6
12
Sep-08 Mar-09 Sep-09 Mar-10
US HOUSING
(% change)%
New home construction
(q%ch)
Mortgages
(y%ch)
%
The USD

23. 23
Business expansion
 US businesses slashed capital
spending (and jobs) heavily.
 Rising productivity to
encourage spending on new
equipment.
 Commercial construction
likely to continue falling.
– But is small compared to
equipment.
0
300
600
900
1200
0
300
600
900
1,200
Mar-00 Mar-03 Mar-06 Mar-09
US INVESTMENT
USD
bn
USD
bn
Equipment
Housing
Commercial
The USD

24. 24
Ready, set…
 Federal Reserves is keeping
2-year interest rates low:
– “exceptionally low rate
for the federal funds
rate for an extended
period”.
 USD can rise further once
Federal Reserve fully
implements its “exit
strategy”.
The USD
65
75
85
95
-1.5
0.0
1.5
3.0
Jan-05 Jan-07 Jan-09
USD & WEIGHTED YIELDS
USD TWI (rhs)
US 2 year swap
spread (weighted to
trading
partners, lhs)
Pts%

25. 25
Heading for the exit
 The Federal Reserve has outlined its “exit strategy”
– Close and then wind down emergency liquidity facilities.
– Increase the discount rate relative to funds rate.
– Roll off or sell US government and mortgage-backed bonds.
– Temporary change in focus: interest rate paid on reserves and
reduce target for reserves.
– “Normalise” funds rate.
Source: Speech by Chairman Bernanke, February 11 2010
The USD

26. 26
Diversification risk: part I
 USD remains the number one
destination for FX reserves.
 The explosion of AAA-rated US
government debt gives reserve
managers plenty to invest in.
0
20
40
60
80
0
20
40
60
80
Dec-99 Dec-02 Dec-05 Dec-08
FX RESERVES
(% of total allocated reserves)% %
GBPJPY Other
USD
EUR
The USD

27. 27
Diversification risk: part II
 US public debt market is still
the world’s largest.
– 56% of AAA-rated
government debt is US.
 Japanese public debt is not
AAA-rated. Only half of
eurozone public debt is AAA-
rated.
The USD

28. 28
Regime change needed
 Exchange rate policy of
the big FX reserve
holders would need to
change to reduce use of
USD as destination for FX
reserves.
Large FX reserves* FX reserves
Free float
Brazil 241
Japan 1,001
Eurozone 197
Managed float / exchange controls
Taiwan 351
China 2,399
Algeria 144
Russia 432
Thailand 138
Real effective exchange rate target
Singapore 190
India 261
US dollar peg
Hong Kong 257
* minimum USD 100 billion
The USD

29. 29
Fiscal precedents
 There are many precedents of large fiscal adjustments.
The USD
0
5
10
15
20
Ireland(1989)
Sweden(2000)
Finland(2000)
Sweden(1987)
Den.(1986)
Greece(1995)
Israel(1983)
Belgium(1998)
Canada(1999)
Cyprus(2007)
UK(2000)
Japan(1990)
Italy(1993)
Port.(1985)
Lux.(1985)
Lux.(2001)
Iceland(2006)
Neth.(2000)
Den.(2005)
Australia(1988)
HK(2005)
NZ(1995)
Austria(2001)
Iceland(2000)
US(2000)
Germany(2000)
Germany(1989)
Switz.(200)
Cyprus(1994)
Spain(2006)
LARGE FISCAL ADJUSTMENTS
(cumulative change in cyclically-adjusted budgetbalance, % of GDP)
%

30. 30
Spreads matter: part I
 Interest rate differentials are
an important influence on
AUD/NZD.
AUD/NZD
1.00
1.10
1.20
1.30
1.40
-2
-1
0
1
2
Jan-07 Jan-08 Jan-09 Jan-10
AUD/NZD & INTEREST RATES
Australia-New Zealand 3 year
swap differentials
(lhs)
AUD/NZD
(rhs)
NZDpp

31. 31
Spreads matter: part II
 Starting point for rate
differentials favour Australia.
 New Zealand usually has a
greater inflation problem
than Australia, so rates have
much further to rise.
AUD/NZD
0
2
4
6
8
0
2
4
6
8
Jan-09 Jan-10 Jan-11
CBA OFFICIAL RATE FORECASTS
Reserve Bank
of Australia
Reserve Bank of
New Zealand
%%
CBA (f)

32. 32
Not just rate spreads
 NZD gains more than AUD
from global economic
recovery.
– New Zealand exports are
30% of GDP while
Australian exports are 20%
of GDP.
0.0
1.5
3.0
4.5
6.01.00
1.10
1.20
1.30
1.40
Jan-00 Jan-03 Jan-06 Jan-09
WORLD GDP & AUD/NZD
AUD/NZD
(inverted)
(lhs)
Expected world GDP
growth over next two
years (rhs)
%paNZD
AUD/NZD

33. 33
Re-connect
 Expectations for the world
economy are important for
AUD/EUR.
AUD/EUR
0
2
4
6
0.40
0.50
0.60
0.70
Jan-00 Jan-03 Jan-06 Jan-09
WORLD ECONOMY & AUD/EUR
AUD/EUR
(end of month, lhs)
Expected world GDP
growth over next two
years (rhs)
%paEUR

34. 34
Little upside left
 AUD/GBP has jumped ahead
of interest rate differentials.
 AUD/GBP is close to the
strongest point. We think
yields on gilts have fallen too
far.
AUD/GBP
0.25
0.35
0.45
0.55
0.65
-2
0
2
4
6
Jan-00 Jan-03 Jan-06 Jan-09
AUD/GBP EXCHANGE RATE
AUS-UK 3-month bill futures
spread, % (lhs)
AUD/GBP (rhs)
ppt GBP

35. 35
From risk aversion to risk loving?
 AUD/JPY tends to rise sharply after a period of financial market volatility
and risk aversion ends.
AUD/JPY
50
70
90
110
130
50
70
90
110
130
Jan-00 Jan-02 Jan-04 Jan-06 Jan-08 Jan-10
Volatility episodes
AUD/JPY AND VOLATILITY
JPY JPY
0.0
0.5
1.0
1.5
2.0
AU US EZ UK NZ
JPY CARRY TRADE INDICATOR
(3 month volatility-adjusted return)

36. 36
Please view our website at www.research.commbank.com.au. The Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945 ("the Bank") and its subsidiaries,
including Commonwealth Securities Limited ABN 60 067 254 399 AFSL 238814 ("CommSec"), Commonwealth Australia Securities LLC, CBA Europe Ltd and Global Markets
Research, are domestic or foreign entities or business areas of the Commonwealth Bank Group of Companies (CBGOC). CBGOC and their directors, employees and
representatives are referred to in this Appendix as “the Group”. This report is published solely for informational purposes and is not to be construed as a solicitation or an offer to
buy any securities or financial instruments. This report has been prepared without taking account of the objectives, financial situation and capacity to bear loss, knowledge,
experience or needs of any specific person who may receive this report. No member of the Group does, or is required to, assess the appropriateness or suitability of the report
for recipients who therefore do not benefit from any regulatory protections in this regard. All recipients should, before acting on the information in this report, consider the
appropriateness and suitability of the information, having regard to their own objectives, financial situation and needs, and, if necessary seek the appropriate professional, foreign
exchange or financial advice regarding the content of this report. We believe that the information in this report is correct and any opinions, conclusions or recommendations are
reasonably held or made, based on the information available at the time of its compilation, but no representation or warranty, either expressed or implied, is made or provided as
to accuracy, reliability or completeness of any statement made in this report. Any opinions, conclusions or recommendations set forth in this report are subject to change without
notice and may differ or be contrary to the opinions, conclusions or recommendations expressed elsewhere by the Group. We are under no obligation to, and do not, update or
keep current the information contained in this report. The Group does not accept any liability for any loss or damage arising out of the use of all or any part of this report. Any
valuations, projections and forecasts contained in this report are based on a number of assumptions and estimates and are subject to contingencies and uncertainties. Different
assumptions and estimates could result in materially different results. The Group does not represent or warrant that any of these valuations, projections or forecasts, or any of the
underlying assumptions or estimates, will be met. Past performance is not a reliable indicator of future performance. The Group has provided, provides, or seeks to provide,
investment banking, capital markets and/or other services, including financial services, to the companies described in the report and their associates. This report is not directed
to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution,
publication, availability or use would be contrary to law or regulation or which would subject any entity within the Group to any registration or licensing requirement within such
jurisdiction. All material presented in this report, unless specifically indicated otherwise, is under copyright to the Group. None of the material, nor its content, nor any copy of it,
may be altered in any way, transmitted to, copied or distributed to any other party, without the prior written permission of the appropriate entity within the Group. In the case of
certain products, the Bank or one of its related bodies corporate is or may be the only market maker. The Group, its agents, associates and clients have or have had long or short
positions in the securities or other financial instruments referred to herein, and may at any time make purchases and/or sales in such interests or securities as principal or agent,
including selling to or buying from clients on a principal basis and may engage in transactions in a manner inconsistent with this report.
US Investors:
If you would like to speak to someone regarding the subject securities described in this report, please contact Commonwealth Australia Securities LLC (the “US Broker-Dealer”),
a broker-dealer registered under the U.S. Securities Exchange Act of 1934 (the “Exchange Act”) and a member of the Financial Industry Regulatory Authority (“FINRA”) at 1 (212)
336-7737. This report was prepared, approved and published by Global Markets Research, a division of Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945
("the Bank") and distributed in the U.S. by the US Broker-Dealer. The Bank is not registered as a broker-dealer under the Exchange Act and is not a member of FINRA or any
U.S. self-regulatory organization. Commonwealth Australia Securities LLC (“US Broker-Dealer”) is a wholly owned, but non-guaranteed, subsidiary of the Bank, organized under
the laws of the State of Delaware, USA, with limited liability. The US Broker-Dealer is not authorized to engage in the underwriting of securities and does not make markets or
otherwise engage in any trading in the securities of the subject companies described in our research reports. The US Broker-Dealer is the distributor of this research report in the
United States under Rule 15a-6 of the Exchange Act and accepts responsibility for its content. Global Markets Research and the US Broker-Dealer are affiliates under common
control. Computation of 1% beneficial ownership is based upon the methodology used to compute ownership under Section 13(d) of the Exchange Act. The securities discussed
in this research report may not be eligible for sale in all States or countries, and such securities may not be suitable for all types of investors. Offers and sales of securities
discussed in this research report, and the distribution of this report, may be made only in States and countries where such securities are exempt from registration or qualification
or have been so registered or qualified for offer and sale, and in accordance with applicable broker-dealer and agent/salesman registration or licensing requirements. The
preparer of this research report is employed by Global Markets Research and is not registered or qualified as a research analyst, representative, or associated person under the
rules of FINRA, the New York Stock Exchange, Inc., any other U.S. self-regulatory organization, or the laws, rules or regulations of any State.
Important Disclosures & Disclaimer

37. 37
European Investors:
This report is published, approved and distributed in the UK by the Bank and by CBA Europe Ltd (“CBAE”). The Bank and CBAE are both registered in England (No. BR250 and
05687023 respectively) and authorised and regulated in the UK by the Financial Services Authority (“FSA”). This report does not purport to be a complete statement or
summary. For the purpose of the FSA rules, this report and related services are not intended for retail customers and are not available to them. The products and services
referred to in this report may put your capital at risk. Investments, persons, matters and services referred to in this report may not be regulated by the FSA. CBAE can clarify
where FSA regulations apply.
Singapore Investors:
This report is distributed in Singapore by Commonwealth Bank of Australia, Singapore Branch (company number F03137W) and is made available only for persons who are
Accredited Investors as defined in the Singapore Securities and Futures Act and the Financial Advisers Act. It has not been prepared for, and must not be distributed to or
replicated in any form, to anyone who is not an Accredited Investor.
Hong Kong Investors:
This report was prepared, approved and published by the Bank, and distributed in Hong Kong by the Bank's Hong Kong Branch. The Hong Kong Branch is a registered
institution with the Hong Kong Monetary Authority to carry out the Type 1 (Dealing in securities) and Type 4 (Advising on securities) regulated activities under the Securities and
Futures Ordinance. Investors should understand the risks in investments and that prices do go up as well as down, and in some cases may even become worthless. Research
report on collective investment schemes which have not been authorized by the Securities and Futures Commission is not directed to, or intended for distribution in Hong Kong.
All investors:
Analyst Certification and Disclaimer: Each research analyst, primarily responsible for the content of this research report, in whole or in part, certifies that with respect to each
security or issuer that the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personal views about those securities or issuers; and (2) no
part of his or her compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by that research analyst in the report. The
analyst(s) responsible for the preparation of this report may interact with trading desk personnel, sales personnel and other constituencies for the purpose of gathering,
synthesizing, and interpreting market information. Directors or employees of the Group may serve or may have served as officers or directors of the subject company of this
report. The compensation of analysts who prepared this report is determined exclusively by research management and senior management (not including investment banking).
No inducement has been or will be received by the Group from the subject of this report or its associates to undertake the research or make the recommendations. The
research staff responsible for this report receive a salary and a bonus that is dependent on a number of factors including their performance and the overall financial
performance of the Group, including its profits derived from investment banking, sales and trading revenue.
Unless agreed separately, we do not charge any fees for any information provided in this presentation. You may be charged fees in relation to the financial products or other
services the Bank provides, these are set out in the relevant Financial Services Guide (FSG) and relevant Product Disclosure Statements (PDS). Our employees receive a
salary and do not receive any commissions or fees. However, they may be eligible for a bonus payment from us based on a number of factors relating to their overall
performance during the year. These factors include the level of revenue they generate, meeting client service standards and reaching individual sales portfolio targets. Our
employees may also receive benefits such as tickets to sporting and cultural events, corporate promotional merchandise and other similar benefits. If you have a complaint, the
Bank’s dispute resolution process can be accessed on 132221.

38. 3838
ANZIIF 2010 Liability Conference
Risk management
Prepared by: Richard Knight
Date: March 2010

39. 3939
Important Information
This advice has been prepared without considering your objectives, financial situation or needs, and
before acting on the advice, you should consider its appropriateness to your circumstances.
Commonwealth Bank of Australia (“CBA”) as a provider of investment, borrowing and other financial
services undertakes financial transactions with many corporate entities in Australia. This may include
any corporate issuer referred to in this report.
For US and US investors: If you would like to speak to someone regarding the subject securities or
issuer(s) described in this report, please contact Commonwealth Australia Securities LLC (“CAS”), a
broker-dealer registered under the U.S. Securities Exchange Act of 1934 (the “Exchange Act”) and a
member of The Financial Industry Regulatory Authority, ( “FINRA”) at 1 (212) 848-9307. This report
was prepared, approved, published, and distributed in the USA by Commonwealth Australia Securities
LLC (“CAS”). CBA is not registered as a broker-dealer under the Exchange Act and is not a member of
the FINRA or any U.S. self-regulatory organization. Please see further disclaimers at the back of this
document.
Please also view our website at www.research.commbank.com.au for a more detailed disclaimer.

40. 40
Facts about the AUD
FX volatility
Average annual AUD/USD trading range is 12 US cents or 18%.
In 2008, AUD/USD traded in a 38.5 cent range (0.6000 to 0.9850).
In 2009, AUD/USD traded in a 31.5 cent range (0.6250 to 0.9400).
In 2010, AUDUSD has traded in a 7.75 cent range (0.8575 to 0.9350).
Average AUD 1 month volatility is 16%. Last year volatility was trading above
40%!
What FX hedging solution is best??

41. 41
Daily moves
AUD
0.60
0.70
0.80
0.90
1.00
0.60
0.70
0.80
0.90
1.00
1-Jan-08 1-Jul-08 1-Jan-09 1-Jul-09 1-Jan-10
AUD/USD DAILY TRADING