Please note and carefully read the

Important Disclosure on the last part

Daily FX & Market Commentary

July 19 2016
Market Recap Published from Tuesday to Friday
Table: Daily Market Movement (Jul 18 2016)
• US stocks rose: The S&P 500 gained Equity Market Indices Close Change % Commodity Futures
U.S. Energy & Metals Close %
0.2% to 2,166, fueled by Bank of America's S&P 500 Index 2,166.89 +5.2 +0.2% WTI Crude Oil (USD/bbl) 45.24 -1.5%
better-than-expected profit and a major Dow Jones Industrial Average 18,533.05 +16.5 +0.1% Brent Crude (USD/bbl) 46.96 -1.4%
NASDAQ Composite Index 5,055.78 +26.2 +0.5% Natural Gas (USD/MMBtu) 2.72 -1.2%
tech sector acquisition. Europe COMEX Gold (USD/oz) 1,329.3 +0.1%
Stoxx Europe 600 Index 338.70 +0.8 +0.2% LME Copper (USD/MT) 4,939.0 +0.4%
• Gold fell: Gold retreated as US stock
DAX Index 10,063.13 -3.8 0.0% Bond Yields & CNY
markets edged up to new all-time highs Japan U.S. Treasuries - Yields Close Change
TOPIX Index 1,317.10 0.0 0.0% 3-Month - Yield (%) 0.30 -0.01
after the weekend's failed military coup in
Nikkei 225 Stock Average 16,497.85 0.0 0.0% 5-Year - Yield (%) 1.13 +0.03
Turkey. China / Hong Kong 10-Year - Yield (%) 1.58 +0.03
Hang Seng Index 21,803.18 +143.9 +0.7% 30-Year - Yield (%) 2.29 +0.03
• Treasury yield gained: 10-year yield rose Hang Seng China Enterprises 9,090.95 +41.3 +0.5% USD/CNY Close %
3.1bps to 1.58% following a failed military Shanghai SE Composite 3,043.56 -10.7 -0.4% China Renminbi Spot 6.70 +0.2%
Data Source: Bloomberg L.P.
coup attempt in Turkey over the weekend.

Hot News: Hong Kong stocks rose for 6 straight days

Chart: Hang Seng Index Outlook on HK stock market
• We maintain a neutral stance on the HK market.
• In our view, even the potential expansion of the
Stock Connect for Shanghai and the extension to
Shenzhen, which could happen in 2016, may not
lead to any significant fund flows into HK.
• Moreover, the small open HK economy could very
much be dragged by the sluggish Chinese
economy, further Fed Funds rate hikes, and
appreciation of USD.
Source: Bloomberg L.P.as of July 18, 2016 • We set our 2017 HSI target at 21,500.

What happened? Outlook on HK-listed China equities

• The Hang Seng Index and Hang Seng China • China Q2 GDP stabilized at 6.7% YoY, came in
Enterprise Index rose for 6 straight days, on stronger than consensus and our forecast.
• We expect monetary policy to remain
optimism that global central banks may further
accommodative and supportive to growth.
monetary policies.
• There are signs of corporate leverage peaking.
• The 6-day rally pushed both index 6% higher. The
The average annualized return in the 16
Hang Seng Index closed at 21,803, while HSCEI
deleveraging cycles worldwide was +6%.
closed at 9,090 yesterday. • We set our mid-2017 MSCI China index target at
62, at 10x forward P/E, and implying 7% upside.
• The HSCEI forecast level in mid-2017 is 9,500.

© 2016 Citibank
Citibank and Arc Design is a registered service mark of Citibank, N.A. or Citigroup Inc. Citibank (Hong Kong) Limited 1
 Please note and carefully read the
Important Disclosure on the last part

Daily FX & Market Commentary

FX & Commodity Technical Corner
Citi Foreign Exchange
YESTERDAY PERFORMANCE FX TREND TECHNICAL
Forecast:
CCY
Short Term 0-3 6-12
Close Price Day High Day Low Support Resistance
Comment Months Months
USD 96.56 96.71 96.47 Neutral 92.60 97.51 97.51 94.13
EUR/USD 1.1075 1.1084 1.1038 Neutral 1.0941 1.1199 1.10 1.15
USD/JPY 106.16 106.26 105.16 Neutral 99.02 106.84 103.00 105.00
GBP/USD 1.3255 1.3315 1.3154 Bearish 1.2798 1.3503 1.25 1.28
USD/CAD 1.2945 1.3022 1.2927 Neutral 1.2832 1.3312 1.30 1.26
AUD/USD 0.7591 0.7607 0.7563 Neutral 0.7485 0.7672 0.72 0.74
NZD/USD 0.7116 0.7158 0.7069 Neutral 0.6964 0.7325 0.69 0.70
USD/CHF 0.9824 0.9847 0.9811 Neutral 0.9500 1.0093 0.99 0.96
USD/CNY 6.7045 6.7047 6.6926 Bullish -- -- 6.65 6.75
USD/CNH 6.7107 6.7164 6.7007 Bullish 6.6869 6.7618 -- --
USD/SGD 1.3475 1.3498 1.3457 Neutral 1.3286 1.4000 1.38 1.39
GOLD 1328.85 1337.85 1323.59 Bullish $1,315 $1,392 1400 1280
FX Rate Source: Bloomberg L.P. (cut off time is NY Time 5:00pm)

• GBP rebounded: BOE Weale said the bank should wait for firmer evidence before policy change.
• JPY plunged: Global equities rose and market risk receded, which undermined the JPY yesterday.
• NZD fell: NZ CPI growth (QoQ) only stayed at 0.4% in Q2, trailed market estimates.
• US Housing Starts: Housing starts may reach 1.165m in June, in line with the levels over the past two months.
Better-than-expected data may raise expectation of rate hikes by the Fed, which may underpin USD.

Daily FX Focus

NZD/USD may range trade between 0.6964-0.7325:

0.7325(July 12 top) NZD Outlook:
• Rate cut expectation: The RBNZ announced
some macro-prudential measures on housing
0.6964(Jun 15 low)
market, which spurred rate cut expectations.

• Yield advantage: Although the RBNZ may cut

rate to 2% this year, other major central banks
may also cut rates or even expand easing. NZD
may still maintain its yield advantage.

• Fund inflow: NZD’s non-commercial net position

turned from net short to net long last week. Fund
inflows may support the NZD at lows.
Source: Bloomberg L.P., data as of Jul 19, 2016

Technical Analysis:
• With RSI trending down, NZD/USD will likely remain range trading between 0.6964(Jun 15 low)-0.7325(July
12 top). However, NZD is still in its uptrend channel, downside may be limited.
NOTE: The brackets are the exchange rates in terms of Hong Kong dollar, with HKD $7.75 exchange rate for reference, and 1,000 yen per unit for JPY/HKD.
© 2016 Citibank
Citibank and Arc Design is a registered service mark of Citibank, N.A. or Citigroup Inc. Citibank (Hong Kong) Limited
2
 Please note and carefully read the
Important Disclosure on the last part

Daily FX & Market Commentary

USD/CNH may trade inside 6.6869-6.7618:
6.7618 (Jan top) RMB Outlook:
• Stable China economy in Q2: China Q2
GDP grows by 6.7% YoY, higher than 6.6%
6.6869 (fibo 0.236)
forecast, while industrial production
rebounded by 6.2%, better than forecast.

• But weak private and manufacturing

investment: Fixed asset investment
decelerated from 9.6% to 9% in Jun, with
private investment only up by 2.8% YoY YTD.

• Expect challenges in H2: We expect weak

Source: Bloomberg L.P., data as of Jul 19, 2016 private investment and adverse weather in
Yangtze region, which may trigger fund
Technical Analysis:
outflow and RMB depreciation.
• We expect the pair may trade inside 6.6869-6.7618 range with
mild upside bias.

USD/JPY may trade inside 99.02-106.84:

JPY Outlook:
106.84-107.67 (24
Jun top & 7 Apr low) • JPY weakened yesterday: JPY dropped on
improved risk appetite as the Turkey military
failed to carry out a coup over the weekend.

• Stimulus measures may be released in

Aug: The total size of the measures may be
99.02-100 (Jun & 8 Jul lows)
above 10trn yen.

• Measures may only have little impact: We

expect the measures may not propel the
economy in a sustained manner, which may
Source: Bloomberg L.P., data as of Jul 19, 2016 disappoint investors and send JPY higher.

Technical Analysis:
• 1) RSI: near overbought; 2) The pair is now near the resistance of the downtrend channel.
• We expect upside may be capped below 106.84-107.67 and the pair may trade inside 99.02-106.84.

NOTE: The brackets are the exchange rates in terms of Hong Kong dollar, with HKD $7.75 exchange rate for reference, and 1,000 yen per unit for JPY/HKD.
© 2016 Citibank
Citibank and Arc Design is a registered service mark of Citibank, N.A. or Citigroup Inc. Citibank (Hong Kong) Limited
3
 Please note and carefully read the
Important Disclosure on the last part

Daily FX & Market Commentary

Important Economic Data (July 18, 2016 – July 22, 2016)

Time Importance Event Period Actual Survey Prior

Monday
07/18/2016 06:45 NZ !! CPI QoQ 2Q 0.40% 0.50% 0.20%
07/18/2016 20:30 CA ! Int'l Securities Transactions May -- -- 15.52b
Tuesday
07/19/2016 04:00 US ! Total Net TIC Flows May -- -- $80.4b
07/19/2016 09:30 AU !! RBA July Meeting Minutes Jul
07/19/2016 16:30 UK !! CPI YoY Jun -- 0.40% 0.30%
07/19/2016 17:00 GE ! ZEW Survey Expectations Jul -- 8 19.2
07/19/2016 20:30 US !! Housing Starts MoM Jun -- 0.50% -0.30%
07/19/2016 20:30 US !! Building Permits MoM Jun -- 1.20% 0.70%
Wednesday
07/20/2016 16:00 EC ! ECB Current Account SA May -- -- 36.2b
07/20/2016 16:30 UK !! Weekly Earnings ex Bonus 3M/YoY May -- 2.40% 2.30%
07/20/2016 16:30 UK !! ILO Unemployment Rate 3Mths May -- 5.00% 5.00%
Thursday
07/21/2016 09:30 AU ! NAB Business Confidence 2Q -- -- 4
07/21/2016 16:30 UK !! Retail Sales Ex Auto Fuel YoY Jun -- 4.90% 5.70%
07/21/2016 16:30 UK !! Retail Sales Inc Auto Fuel YoY Jun -- 5.10% 6.00%
07/21/2016 19:45 EC !!! ECB Main Refinancing Rate Jul -- 0.00% 0.00%
07/21/2016 20:30 US !! Initial Jobless Claims Jul -- -- 254k
07/21/2016 22:00 US !! Existing Home Sales MoM Jun -- -1.20% 1.80%
07/21/2016 22:00 US ! Leading Index Jun -- 0.20% -0.20%
Friday
07/22/2016 16:00 EC !! Markit Eurozone Manufacturing PMI Jul -- 52 52.8
07/22/2016 20:30 CA ! Retail Sales MoM May -- 0.00% 0.90%
07/22/2016 20:30 CA ! Retail Sales Ex Auto MoM May -- 0.20% 1.30%
07/22/2016 20:30 CA !! CPI YoY Jun -- 1.70% 1.50%
07/22/2016 20:30 CA !! CPI Core YoY Jun -- 2.00% 2.10%

Source: Source: Bloomberg L.P.

(K = Thousand, M = Million, B = Billion)

4
Daily FX & Market Commentary
Important Disclosure
“Citi analysts” refers to investment professionals within Citi Research (CR) and Citi Global Markets (CGM) and
voting members of the Global Investment Committee of Global Wealth Management.
Citibank N.A. and its affiliates / subsidiaries provide no independent research or analysis in the substance or
preparation of this document. Investment products are not available to US persons and not all products and
services are provided by all affiliates or are available at all locations.
This document is for general informational purposes only and is not intended as a recommendation or an offer or
solicitation for the purchase or sale of any security, currency, investment, service or to attract any funds or deposits.
Information in this document has been prepared without taking account of the objectives, financial situation or
needs of any particular investor. Therefore, investment products mentioned in this document may not be suitable
for all investors. Any person considering an investment should seek independent advice on the suitability or
otherwise of a particular investment. Before making any investment, each investor must obtain the investment
offering materials, which include a description of the risks, fees and expenses and the performance history, if any,
which may be considered in connection with making an investment decision. Each investor should carefully
consider the risks associated with the investment and make a determination based upon the investor’s own
particular circumstances, that the investment is consistent with the investor’s investment objectives.

In any event, past performance is no guarantee of future results, and future results may not meet our expectations
due to a variety of economic, market and other factors. Further, any projections of potential risk or return are
illustrative and should not be taken as limitations of the maximum possible loss or gain. Investments are not
deposits or other obligations of, guaranteed or insured by Citibank N.A., Citigroup Inc., or any of their affiliates or
subsidiaries, or by any local government or insurance agency, and are subject to investment risk, including the
possible loss of the principal amount invested. Investors investing in funds denominated in non-local currency
should be aware of the risk of exchange rate fluctuations that may cause a loss of principal.
Neither Citigroup nor its affiliates can accept responsibility for the tax treatment of any investment product, whether
or not the investment is purchased by a trust or company administered by an affiliate of Citigroup. Citigroup
assumes that, before making any commitment to invest, the investor and (where applicable, its beneficial owners)
have taken whatever tax, legal or other advice the investor/beneficial owners consider necessary and have
arranged to account for any tax lawfully due on the income or gains arising from any investment product provided
by Citigroup. If an investor changes country of residence, citizenship, nationality, or place of work, it is his/her
responsibility to understand how his/her investment transactions are affected by such change and comply with all
applicable laws and regulations as and when such becomes applicable.
Although information in this document has been obtained from sources believed to be reliable, Citigroup and its
affiliates do not guarantee its accuracy or completeness and accept no liability for any direct or consequential
losses arising from its use. Opinions expressed herein may differ from the opinions expressed by other businesses
or affiliates of Citigroup, and are not intended to be a forecast of future events, a guarantee of future results or
investment advice, and are subject to change based on market and other conditions. The information contained
herein is also not intended to be an exhaustive discussion of the strategies or concepts.
At any time, Citigroup companies may compensate affiliates and their representatives for providing products and
services to clients.

This is not an official statement of Citigroup Inc. and may not reflect all of your investments with or made through
Citibank. For an accurate record of your accounts and transactions, please consult your official statement.

If this document shows information coming from Citi Research, please refer to the attached link:
https://www.citivelocity.com/cvr/eppublic/citi_research_disclosures , which contains the important disclosures
regarding companies covered by Citi's Equity Research analysts, and please refer to the attached link:
https://ir.citi.com/PuXs6xELNHAu7UqkjgvWxnihtUeLtAtDxeEh%2B2qaPpPb7uukpx8Qw1vzcuidtMtqgn1BWqJqak
8%3D for details on the Citi Research ratings system.
This document may not be reproduced or circulated without Citigroup written authority. The manner of circulation
and distribution may be restricted by law or regulation in certain countries. Persons who come into possession of
this document are required to inform themselves of, and to observe such restrictions. Any unauthorised use,
duplication, or disclosure of this document is prohibited by law and may result in prosecution.
This document is distributed in Hong Kong by Citibank (Hong Kong) Limited (“CHKL”). Prices and availability of
financial instruments can be subject to change without notice. Certain high-volatility investments can be subject to
sudden and large falls in value that could equal the amount invested. 5
Daily FX & Market Commentary
Important Disclosure
Risk relating to RMB – If you choose RMB as the base currency or the alternate currency, you should also note the
following:
RMB is currently not freely convertible through banks in Hong Kong. Due to exchange controls and/or restrictions
imposed 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.