Mtfx forecast 022016

Section
6
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FOREX MAJORS (USD) 2016 2017
SPOT Q1f Q2f Q3f Q4f Q1f Q2f Q3f Q4f
Canadian Dollar USD/CAD 1.40 1.45 1.40 1.37 1.34 1.33 1.32 1.31 1.30
Euro EUR/USD 1.08 1.07 1.11 1.12 1.14 1.15 1.16 1.17 1.18
British Pound GBP/USD 1.42 1.41 1.43 1.48 1.56 1.54 1.56 1.57 1.58
Japanese Yen USD/JPY 121 121 123 122 121 120 119 118 116
Swiss Franc USD/CHF 1.02 1.02 0.99 1.00 0.99 1.00 0.99 0.98 0.97
Australian Dollar AUD/USD 0.71 0.68 0.69 0.71 0.74 0.75 0.76 0.77 0.78
New Zealand Dollar NZD/USD 0.65 0.65 0.66 0.68 0.69 0.70 0.71 0.72 0.73
OTHER PAIRS (USD) 2016 2017
Chinese Renminbi CNY/USD 6.60 6.60 6.70 6.75 6.80 6.80 6.70 6.65 6.60
Indian Rupee INR/USD 67.9 68.0 68.5 66.0 65.0 64.5 64.0 63.5 63.0
South African Rand ZAR/USD 15.86 15.80 14.90 14.60 14.30 14.1 14.15 14.1 14.15
Polish Zloty PLN/USD 4.08 4.33 4.35 4.37 4.33 4.30 4.30 4.20 4.10
Kenya Shilling KES/USD 102 102 103 102 100 100 99 98 97
CANADIAN CROSSES 2016 2017
Euro EUR/CAD 1.51 1.55 1.55 1.53 1.53 1.52 1.53 1.54 1.53
British Pound GBP/CAD 1.99 2.04 2.00 2.03 2.09 2.05 2.06 2.07 2.06
Japanese Yen CAD/JPY 87 83 88 89 90 91 90 89 90
Swiss Franc CAD/CHF 0.73 0.70 0.71 0.73 0.74 0.75 0.76 0.75 0.74
Austalian Dollar AUD/CAD 0.99 0.99 0.98 0.97 1.00 0.99 1.00 1.01 1.01
New Zealand Dollar NZD/CAD 0.90 0.94 0.92 0.93 0.92 0.93 0.94 0.95 0.96
Chinese Renminbi CNY/CAD 4.70 4.55 4.79 4.93 5.07 5.11 5.10 5.09 5.0
Indian Rupee INR/CAD 48.4 46.9 48.9 48.1 48.5 48.4 48.3 48.4 48.5
South African Rand ZAR/CAD 11.33 10.90 10.65 10.66 10.67 10.60 10.72 10.76 10.88
Polish Zloty PLN/CAD 2.92 2.99 3.11 3.19 3.23 3.23 3.26 3.21 3.15
Kenya Shilling KES/CAD 73 70 74 74 75 75 75 74 74
MTFX
Analytics
FOREX CURRENCY FORECAST (2016 - 2017)

Section
6
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USD
CAD
EUR
GBP
The beginning of the Fed’s tightening cycle, combined with increased market volatility
provided the perfect ingredients for further appreciation in the US dollar in the month of
January. However, the Fed’s dovish stance coupled with market expectations of a March
rate hike being pushed out had most participants pare back positions and collapse the
trajectory of the appreciating dollar. The Fed’s renewed patience should weigh on the
greenback in the medium term with the USD losing ground against most majors well
into 2017. Bias – neutral (neutral USD)
The Canadian dollar experienced a wild ride in the month of January tumbling to the
1.46 level against the US dollar before recovering to the high 1.39’s to close the month.
The CAD has dropped more than 16% in 2015 and has fallen over 30% over the last
three years. Oil prices will continue to be the dominating factor for the CAD, however a
shift from monetary policy to fiscal policy dynamics to stimulate growth should allow for
a rebound in the loonie over the rest of the year. Bias – bullish (stronger CAD)
All the hype that surrounded Mario Draghi and significant further stimulus did not live
up to expectations in December or in January, which helped euro hold in value against
its peers. However, Draghi and company were surprising dovish last month suggesting
downside risks have dramatically increased while inflation projections remains sharply
lower. Draghi’s comments make it more likely that the euro will weaken into the ECB’s
March meeting as expectations for further stimulus increase. Bias – bearish (weaker
EUR)
The British pound has entered 2016 with a weakening bias, trading at fresh multi-month
lows while maintaining a downward trend. Uncertainty over the country’s place in the EU
and the ballooning account deficit are likely to weigh on the currency in the short term.
However, fundamentals across the UK continue to remain strong with growth expected
to outperform most of its peers, which should be pound supportive over the medium
term. Bias – bullish (stronger GBP)
FEBRUARY 2016 - CURRENCY HIGHLIGHTS

Section
6
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February 2016 2016f 2017f
Spot
USD/CAD MTFX 1.45 1.40 1.37 1.34 1.33 1.32 1.31 1.30
Consensus Forecast 1.40 1.39 1.38 1.38 1.37 1.36
EUR/USD MTFX 1.07 1.11 1.12 1.14 1.15 1.16 1.17 1.18
Consensus Forecast 0.95 0.98 1.00 1.07 1.12
GBP/USD MTFX 1.41 1.43 1.48 1.56 1.54 1.56 1.57 1.58
Consensus Forecast 1.42 1.44 1.45 1.46 1.48 1.50
FEBRUARY 2016 - US DOLLAR HIGHLIGHTS
U.S. DOLLAR COMMENT:
Although the USD opened the year on a strong footing as a
result of heightened risk sentiment and an uncertain
international backdrop, the Fed’s dovish stance at their
January FOMC meeting coupled with expectations for a
prolonged pause before the next interest rate increase is
likely to see the USD lose ground against other majors
despite a strong domestic economy.
The US economy is showing healthy signs of momentum as
we begin 2016. While most reports have been mixed,
consumer spending and housing activity remain well
supported by a robust job market, rising income, solid
household balance sheets, cheap oil prices and low borrow-
ing costs. Ongoing hiring gains have pushed the unem-
ployment rate to a seven-year low of 5.0% and measures of
labor market underutilization continue to improve. Con-
sumer confidence has softened a little, but remains relative-
ly firm as buying intentions remain solid. Industrial activity
remains soft as a result of sluggish export sales being
weighed by a strong US dollar. However, domestic sales
continue to maintain an expansionary tone led by manufac-
turing production and consumer goods. Core inflation
remains muted tempered by lower import costs and
commodity prices.
Despite the strong domestic performance in the US,
uncertainty about the international backdrop, weak price
gains and lower inflation rates will cause the Fed to take
long pause before the next interest rate increase meaning
the USD is likely to cool over the coming months. The Fed’s
renewed patience coupled with other economies beginning
to show strength should see the USD lose ground against
most of the other majors with a pullback extending well into
2017.
JANUARY 2016 CURRENCY RETURNS
Q1f Q2f Q3f Q4f Q1f Q2f Q3f Q4f
1.09
ECONOMIC EVENT DATE
USD ISM Manufacturing PMI FEB 01
USD ADP Non Farm Payrolls FEB 03
USD ISM Non Manufacturing PMI FEB 03
USD Non Farm Payrolls & Unemployement Data FEB 05
USD Retail Sales FEB 12
EVENTS TO WATCH FEBRUARY 2016
-4.0%
-3.5%
-3.0%
-2.5%
-2.0%
-1.5%
-1.0%
-0.5%
0.0%
CAD EUR GBP
1.45 1.42 1.40
1.05 1.00 0.95
1.41 1.41 1.42

Section
6
MTFX
Analytics
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Fax: 1.866.206.1740
Februrary 2016 2016f 2017f
USD/CAD Spot Q1a Q2a Q3a Q4f Q1f Q2f Q3f Q4f
MTFX Forecast 1.45 1.40 1.37 1.34 1.33 1.32 1.31 1.30
Consensus Forecast 1.40
USD/CAD CURRENCY TREND - JANUARY 2016 HIGHLIGHTS:
ECONOMIC EVENT DATE
CAD Unemployment Data FEB 05
CAD Ivey PMI FEB 05
CAD Trade Balance FEB 05
CAD Consumer Price Inflation FEB 19
CAD Retail Sales FEB 19
Bearish Bullish
Although our call for further CAD
weakness was correct, the currency
tumbled farther and faster than
expected. The loonie tumbled to the
1.46 levels against the US dollar before
recovering to the high 1.39s to close
the month. Plunging oil prices and
significant domestic risks including
weak growth expectations, weak
consumer confidence, low inflation and
weak unemployment continue to weigh
on the loonie.
Markets expect no significant pick-up in
commodity prices in the medium term
which will provide additional head-
winds for domestic growth prospects.
Poloz is expected to hold interest rates
steady for the remainder of the year
and seems to have shifted the onus
onto fiscal policymakers to provide the
economy with much needed stimulus
to the tune of at least a $30bn deficit.
Over the remainder of the year, the use
of fiscal stimulus instead of monetary
stimulus should benefit the loonie as
interest rate spreads with the US are
likely to remain stable. The shift in
policy mix combined with stabilizing oil
prices and tighter US monetary policy
will likely result in an appreciating bias
for the loonie over the latter part of the
year.
USD/CAD FEBRUARY 2016 HIGHLIGHTS
MARKET SENTIMENT:
1.39 1.38 1.38 1.37 1.36
1.38
1.39
1.4
1.41
1.42
1.43
1.44
1.45
1.46
1.401.421.45

Section
6
MTFX
Analytics
Toll Free: 1.800.832.5104
Fax: 1.866.206.1740
February 2016 2016f 2017f
EUR/USD Spot Q1a Q2a Q3a Q4f Q1f Q2f Q3f Q4f
MTFX Forecast 1.07 1.11 1.12 1.14 1.15 1.16 1.17 1.18
EUR/USD CURRENCY TREND - JANUARY 2016 HIGHLIGHTS:
ECONOMIC EVENT DATE
EUR German Manufacturing PMI FEB 01
EUR German Unemployment Change FEB 02
EUR ECB Draghi Speech FEB 04
EUR German GDP FEB 12
EUR German ZEW Sentiment FEB 16
Bearish Bullish
The hype of a December policy easing
and additional stimulus did not live up
to expectations and resulted in an
almost 3% increase the day following
the announcement. January saw the
euro hold in value against the green-
back as well as other major currencies.
However, much of 2016’s appreciation
should reverse as risk appetites
rebound and fundamentals begin to
weigh on the currency.
From a fundamental perspective,
Draghi stated last month that inflation
was sharply lower than forecast and
that downside risks have increased
since the beginning of the year. As a
result of these dovish comments,
market chatter about additional
stimulus in March have increased which
may encourage further weakness in the
near term.
In the longer term there are signs of
“green shoots” that could see the euro
rebound. Taking a step back from the
current volatility, markets expect the
euro area to support global growth by
growing at a pace of just under two
percent. Stabilization of fundamentals
should allow the single currency to
recover to the mid-teens by end of
2016.
EUR/USD FEBRUARY 2016 HIGHLIGHTS
MARKET SENTIMENT:
0.95 0.98 1.00 1.07 1.12
1.07
1.075
1.08
1.085
1.09
1.095
1.1
0.951.001.05

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6
MTFX
Analytics
Toll Free: 1.800.832.5104
Fax: 1.866.206.1740
Februrary 2016 2016f 2017f
GBP/USD Spot Q1a Q2a Q3a Q4f Q1f Q2f Q3f Q4f
MTFX Forecast 1.41 1.43 1.48 1.56 1.54 1.56 1.57 1.58
GBP/USD CURRENCY TREND - JANUARY 2016 HIGHLIGHTS:
ECONOMIC EVENT DATE
GBP Services PMI FEB 03
GBP BoE Interest Rate Decision and MPC Minutes FEB 04
GBP Consumer Price Inflation FEB 16
GBP Employment Data FEB 17
GBP Retail Sales FEB 19
Bearish Bullish
The British Pound is likely to trend
lower in the coming months given the
UK’s large current account deficit and
uncertainty over the country’s place in
the EU. The confidence in the timing of
rate increases by the Bank of England
have weakened and may not material-
ize until the end of the year. As a result,
Sterling is likely to remain under
pressure in the near term and possibly
test lower-lows as we approach the EU
summit on February 18-19.
Despite the current downdraft on the
currency, better days are expected in
the second half of the year. Fundamen-
tally, the UK will continue to outper-
form most of its peers with GDP
advancing at a solid pace and unem-
ployment continuing to decline. This
continuing upward trend is likely to
accelerate wage growth and inflation,
allowing for a relatively strong
economic outlook.
Our call of a H1 2016 rate increase has
been priced out toward the end of 2016
and possibly 2017. However, strong
economic fundamentals and solid
growth should drive recovery in the
pound and the UK economy. We hold
2016 year-end target of 1.56-1.57.
GBP/USD FEBRUARY 2016 HIGHLIGHTS
MARKET SENTIMENT:
1.44 1.45 1.46 1.48 1.50
1.41
1.42
1.43
1.44
1.45
1.46
1.47
1.48
1.421.411.41

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MTFX
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Toll Free: 1.800.832.5104
Fax: 1.866.206.1740
-
This publication has been prepared by MTFX Inc. 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 implied, is made as to their accuracy or completeness and neither the information nor the forecast shall be taken as
a representation for which MTFX Inc., its affiliates or any of their employees incur any responsibility. Neither MTFX Inc. nor its
affiliates accept any liability whatsoever for any loss arising from any use of this information.
MTFX Analytics
2750 14th Avenue, Suite 306
Markham, Ontario Canada L3R 0B6
Toll Free: 1.800.832.5104
Fax: 1.866.832.5104
This report has been prepared by MTFX Inc. as a resource for its clients. The
opinions, projections and estimates contained herein are our own and subject to
change without notice.
FOREIGN EXCHANGE DISCLAIMER

Mtfx forecast 022016

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