Monthly FX Outlook June 18, 2015 Currency Strategy Highlights • The USD has languished recently despite economic data proving that Q1’s weakness was Economics Royce Mendes ECONOMICS TORONTO (416) 594-7354 [email protected] Andrew Grantham ECONOMICS TORONTO (416) 956-3219 [email protected] Jeremy Stretch MACRO STRATEGY LONDON +44 (0) 207-234-7232 [email protected] Patrick Bennett MACRO STRATEGY HONG KONG +852 3907 6351 [email protected] John H Welch MACRO STRATEGY TORONTO (416) 956-6983 [email protected] http://research. cibcwm.com/res/Eco/ EcoResearch.html largely transitory. Nevertheless, look for the USD to gain strength as the Fed’s first rate hike approaches in September. • Over the past month the loonie lost momentum as data disappointed, oil prices took a breather and the Bank of Canada called out the currency’s appreciation. With no imminent domestic catalysts for strength, look for CAD to weaken to 1.27 as the USD regains broad strength ahead of liftoff. Events to Watch in Coming Month • Developments in the Greek saga over the next month are likely to support higher levels of volatility in the EUR, peripheral spreads and European equities. • The Minutes of the June FOMC meeting will be published on July 8th. Markets will be keenly focussed on any discussions about the timing and pace of rate increases. • The Bank of Canada will be publishing its latest interest rate decision and providing markets with updated forecasts on July 15th. The Governing Council will have the chance to publish its assessment of the economy’s recovery after the Q1 disappointment. We’re interested to see how confident the BoC is in its projected second-half recovery. Currency Outlook End of period: 18-Jun-15 2015 III 2015 IV US$ Rates: USDCAD EURUSD USDJPY GBPUSD USDCHF AUDUSD USDBRL USDMXN USDKRW USDCNY USDSGD USDTWD USDMYR USDINR Other Crosses: CADJPY AUDCAD GBPCAD EURCAD EURJPY EURGBP EURCHF EURSEK EURNOK 2016 I 2016 II 2016 III 2016 IV 1.22 1.14 123 1.59 0.92 0.78 3.05 15.23 1107 6.21 1.33 30.7 3.71 63.7 1.27 1.05 126 1.52 1.00 0.73 3.02 14.93 1130 6.20 1.35 31.0 3.80 64.5 1.26 1.08 126 1.57 0.99 0.75 3.13 14.85 1120 6.20 1.36 31.5 3.75 64.0 1.24 1.12 125 1.61 0.96 0.77 3.18 14.80 1110 6.18 1.34 31.0 3.65 63.5 1.23 1.15 122 1.60 0.94 0.79 3.22 14.79 1100 6.16 1.32 30.0 3.55 63.0 1.22 1.18 120 1.61 0.92 0.82 3.21 14.80 1085 6.14 1.30 29.9 3.45 62.5 1.24 1.21 118 1.61 0.90 0.85 3.21 14.83 1070 6.12 1.28 29.8 3.40 61.5 101 0.95 1.93 1.39 140 0.72 1.04 9.22 8.79 99 0.93 1.93 1.33 132 0.69 1.05 9.35 8.45 100 0.95 1.97 1.36 136 0.69 1.07 9.30 8.35 101 0.95 2.00 1.39 140 0.70 1.08 9.20 8.25 99 0.97 1.96 1.41 140 0.72 1.08 9.10 8.22 98 1.00 1.96 1.44 142 0.74 1.09 9.00 8.20 95 1.05 2.00 1.50 143 0.75 1.09 8.95 8.15 CIBC World Markets Inc. • PO Box 500, 161 Bay Street, Brookfield Place, Toronto, Canada M5J 2S8 • Bloomberg @ CIBC • (416) 594-7000 CIBC World Markets Corp. • 3 0 0 M a d i s o n A v e n u e , N e w Yo r k , N Y 1 0 0 1 7 • ( 2 1 2 ) 8 5 6 - 4 0 0 0 , ( 8 0 0 ) 9 9 9 - 6 7 2 6 CIBC World Markets Inc. Monthly FX Outlook - June 18, 2015 What’s Wrong with the US Dollar? expect the USD to shrug off some of these more idiosyncratic factors, and make one more move higher around the time of the first rate hike. Economic data has been solid over the past month and the US recovery looks like it’s back on track. However the currency is barely treading water against other majors. So what’s wrong with the USD? It’s certainly not the domestic economy. Payrolls were way ahead of consensus, retail sales revealed that the US consumer was out spending as early as March and the ISM manufacturing index suggested that new orders were growing. The headwinds facing the US dollar have instead come from factors supporting foreign currencies (and the somewhat dovish interest rate projections from the Fed), which have outweighed the effects of strong US data. Lower Flight Path for the Loonie The second half of May saw the loonie reverse course and depreciate versus the USD. That was primarily driven by three key factors. The economy suffered a surprise contraction in the first quarter, the rally in oil prices stalled, and the Bank of Canada put the currency on notice. With Q1 GDP coming in well below expectations and many 2015 growth forecasts being lowered, the loonie came under pressure from renewed risks of a rate cut. Our forecast continues to see the economy take longer to fully recover from the oil price shock than most expect, which should restrain the currency moving forward. However, we don’t believe it will be enough to cause the BoC to actually cut rates. In the euro area, economic data has surprised to the upside to an even greater extent than in the US (Chart 1). As a result of the positive data and the sharp normalization of extremely low yields, the EUR has performed well against the USD. It’s a similar story for the yen as Japanese data releases have surprised investors. But the yen also caught a bid after the Governor of the BoJ made statements suggesting that he didn’t believe the currency would depreciate much further against the US dollar. With regard to oil prices, they ended a two-month march higher and have since been range-bound, trading below $62 since mid-May. As a result, volatility has plummeted (Chart 2, left). Although prices could move higher next year, the market is still flush with supply which should restrain them in the near term. Going forward, we expect markets to change their tune. With the US recovery on firmer ground, a September rate hike by the Fed remains our forecast. That should lift US yields and cause the spread between Treasuries and Bunds/JGBs to widen again. So we Finally, in the 40 days between interest rate decisions, USDCAD averaged 1.21 and hit a low of 1.19 (Chart 2, right). As a result, the BoC took aim at the currency in its most recent interest rate announcement saying that Chart 2 - Oil Prices Have Settled into a Range Around $60 (L), While CAD Strength Forced Bank to Take Verbal Action (R) Chart 1 - US Data Releases Have Surprised…Just Not Enough (L), Causing EUR and JPY to Outperform (R) Change in Economic Surprise Index Since June 1 20 4 Currency Movements Since June 1 (%) 60 3 2 15 1 55 1.30 50 1.25 45 1.20 40 1.15 Canadian Dollar Days Between BoC Rate Decisions 0 10 -1 -2 5 -3 0 WTI 90 Day Volatility 1.35 US EZ Japan -4 01-Jun USD Index EUR JPY 05-Jun 09-Jun Source: Bloomberg, CIBC Source: Bloomberg, CIBC 2 CIBC World Markets Inc. Monthly FX Outlook - June 18, 2015 Greek discussions are expected to weigh on the EUR as the hard deadline for IMF repayments at the end of the month approaches. And while a compromise could provide a short-term boost to the currency, we believe that longer term it will only have provided better levels to sell into. With the ECB expected to continue its QE program for the foreseeable future and UST-Bund spreads—which have normalized recently— likely having little room to tighten any further, look for the EUR to ease to 1.05 versus the USD by September 2015 (Chart 3, right). However, 2016 should see the single currency reverse some of those losses as the positive effects of QE take hold and lead to consensustopping GDP growth of 2.2%. it would be monitoring the “net effect” of the stronger Canadian dollar and higher oil prices. Since then the loonie has averaged 1.24 versus the greenback. With the Fed expected to increase rates in September and the Bank of Canada in favour of a softer loonie, the path of least resistance seems to be one of more CAD weakness. Look for USDCAD to drift to 1.27 around the time of the Fed rate hike in September, before CAD claws back some ground as Yellen & Co. take a pause in mid-2016. Euro Softness Projected Regardless of Greek Outcome A Not So Sterling Month There’s a game of tug-o-war currently being played between economic recovery and political uncertainty— and the euro is stuck in the middle of it. There have been encouraging signs on the economic front. Inflation readings have looked a little firmer and have alleviated fears of Eurozone-wide deflation, while growth appears to be continuing at a moderate pace (even if it has been supported by a markedly weaker exchange rate and lower gasoline prices). It hasn’t been a sterling month for those following the GBP. Fluctuations in cable have generally followed the highs and lows of the USD more broadly, as investors assess (and reassess) expectations for Fed tightening. Against the euro, sterling has been trading in a relatively sideways range—holding onto its previous gains but failing to gather any further upward momentum. But uncertainty regarding Greek debt negotiations remain. The market’s previous complacency that policymakers will somehow muddle through has been replaced by increasing concern that an exit may be on the horizon. As a result, a positive relationship between Greek bond prices and EURUSD has re-emerged (Chart 3, left), which is pulling the euro lower as economic surprises try to push it higher. That’s partly because signs of economic improvement in the UK haven’t been quite as stark as other countries. True, industrial production growth exceeded expectations and even the stubbornly wide trade deficit narrowed more than expected in the latest month. But the important PMI indexes have pointed to cooling trends in both the manufacturing and key services sectors. If sterling is to emerge from the shadows of other currencies, we’ll need to see expectations for BoE tightening being brought forward again. And that could well happen with markets perhaps too complacent regarding the possibility of a move in early 2016. Recent comments from one MPC hawk Ian McCafferty suggest he’s itching to cast a dissenting vote in favour of an immediate hike again. So while sterling may lose ground against the USD if the Fed hikes in September, a building of rate-hike expectations in the UK as well should see it gain at least modestly against the euro. Chart 3 - Correlations with Data & Greek Bond Prices Have Driven the EUR Recently (L), Spreads Expected to Widen (R) 0.3 0.2 60-Day Correlation with EURUSD 2.0 1.00 1.9 1.8 1.05 1.7 0.1 1.6 1.5 0.0 1.4 Forecast 1.10 1.15 1.3 -0.1 Current YTD Avg. 2014 Avg. Economic Surprise Index Greek 10 Year Bond Prices Source: Bloomberg, CIBC 1.2 2015 1.20 2016 US-German 10-Year Spread, LHS (%) EURUSD (Reverse) 3 CIBC World Markets Inc. Monthly FX Outlook - June 18, 2015 Chart 4 - UK Referendum Polls Showing Uncertainty 50 Chart 5 - Japanese Core Inflation is Again Nearing Zero 2.5 UK Referendum Poll (%): Should the UK remain a member of the EU? 45 Japanese Core Inflation, year/year (%) 2.0 Target 40 1.5 35 30 1.0 25 20 0.5 15 Avg. Inflation 12 Months Prior to Tax Hike 10 0.0 5 0 Yes No -0.5 Jun-13 Unsure Dec-13 Jun-14 Dec-14 Source: Bloomberg, CIBC Source: YouGov, CIBC Despite the upward revision of Q1 GDP, the output gap remains large. That, coupled with weak inflation, will keep pressure on the central bank to at least continue purchasing assets, if not increase the pace of easing. Furthermore, we still see broad USD strength around the time of the first Fed hike in September. All told, look for USDJPY to rise to 126 in Q3. Nevertheless, later in 2016, GBP could give up those gains. Fears of a UK exit from the EU, even though a referendum on the matter is a long way away, has already led ratings agency S&P to place the UK on negative watch. With any exit from the EU seen as threatening growth prospects for the key financial sector as well as exporters and possibly result in a downgrade of the UK’s sovereign rating, sterling could struggle as we get closer to that vote (Chart 4). Despite Strong Labour Numbers, RBA Might Ease Again A Verbal Intervention for the Yen Earlier this month, the RBA cut its growth forecast while raising projections for the unemployment rate as business spending continues to disappoint and demand from China wanes. Last week, Governor Kuroda suggested that he believed the yen was fairly valued at current levels, and that further depreciation was unlikely. While this might limit short-term downside in the currency, it’s not clear that the government is as convinced that the yen’s slide is over. Given that Economics Minister Amari tried to downplay the Governor’s comments, it seems that the Abe administration remains happy fostering a cheap JPY in an attempt to boost trade and inflation. Moreover, Governor Kuroda has tried to walk back his comments as the BoJ is not officially responsible for the currency and he is not meant to comment directly on value of the yen. Nevertheless, May employment data showed unexpectedly robust job gains and the unemployment rate dropped to 6.0%, which is the lowest in a year (Chart 6, left). However, we remain cautious about extrapolating much in terms of aggregate demand as employment data in Australia is notoriously volatile (Chart 6, right). As a result, we remain of the view that the recent employment gains were a blip and the situation is likely to deteriorate from here. That may cause the RBA to cut rates again in the not-so-distant future even though they’re already at record lows. The minutes from the most recent RBA meeting suggest that the central bank believes the currency needs to move lower and stay there for a sustained period to provide a significant With regards to the economy, as the consumption tax hike has dropped out of the year-over-year CPI calculation, it’s exposed the fact that there’s been little change in underlying Japanese inflation over the past year (Chart 5). Although core CPI is higher since QE began, inflation is still far from the BoJ’s target of 2%. 4 CIBC World Markets Inc. Monthly FX Outlook - June 18, 2015 Chart 6 - Employment Surprised in May (L), But the Release is Even More Volatile than in Canada (R) 50 40 Change in Full-Time Employment (000's) 30 25 30 20 Chart 7 - USDBRL Spot, the SELIC Policy Rate, and Inflation Standard Deviation of Monthly Employment Changes 16% 3.50 14% 3.00 12% Forecast 10% 20 2.00 8% 10 15 0 -10 -20 4% Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 0 1.00 Target 0.50 2% 5 -30 1.50 6% 10 2.50 0% 0.00 Aug-10 Nov-11 Jan-13 Mar-14 Jun-15 Aug-16 Oct-17 Australia IPCA inflation (YoY, L) Inflation target Canada Source: Australian Bureau of Statistics, CIBC SELIC rate (L) USD/BRL (R) Source: Banco Central do Brasil, IBGE , CIBC boost to the economy. Look for the possibility of further RBA easing to weigh on the AUD in the coming months and take AUDUSD to 0.73 around the time the Fed starts raising rates in September. turned constructive; in fact, they have deteriorated recently. However, once the relative price shock is over, tightening monetary and fiscal policies should lead to better price dynamics in a few months. According to the IBGE, Q1 2015 real GDP fell by 0.2% quarter/quarter (-1.6% year/year), better than the consensus forecast of -0.5% quarter/quarter (or -1.8% year/year). The “positive” surprise has allowed us to only modestly lower our 2015 GDP growth forecast to -1.4% from the prior -0.9%. Brazilian Prices Continue to Move Higher The real has been a solid performer versus the US dollar since June 3rd when the Banco Central decided to increase the SELIC rate by 50 bps to 13.75%. In addition, Petrobrás returned to the bond market and issued a 100-year bond which also contributed to the strength. We expect the real to gain some strength from higher rates in the near term, but for it to lose ground longer term as the economy continues to falter. Interestingly, the statement accompanying Banco Central do Brasil’s interest rate hike did not change from the previous one, which could be seen as a signal that another 50-bp increase is in the cards. Consequently, we have revised our forecast to include a hike of 50 bps in July to bring the SELIC to 14.25%. Mexico to Wait Until After the Fed to Raise Rates After weakening during the second half of May and early June, USDMXN hit a multi-year high. However, since then the peso has steadily appreciated with May inflation data showing that prices had dipped below Banxico’s 3% target. May inflation data came in at 0.7% (8.5% year/year), above the consensus of 0.6% (Chart 7). It now seems like inflation has not peaked and corrective inflation will continue. Driven by a new surge in administrative prices combined with food and beverage price increases, inflation is now almost 200 bps above the 6.5% ceiling of the target band. May inflation came in lower than expected, showing a 0.5% fall in prices (+2.9% year/year), in line with consensus forecasts (Chart 8). Electricity led the declines in prices as they were down 23.3%, indirectly because of lower petroleum costs. Core inflation also came in around expectations at 0.1% on lower service inflation. Given that the deflation pressure could easily be reversed in the next 12 months (as the market We expect inflation to stay above 8.0% for most of 2015 and threaten 9% before starting to slowly fall in late 2015. Inflation dynamics have not yet 5 CIBC World Markets Inc. Monthly FX Outlook - June 18, 2015 CNY & CNH Stability Continues Chart 8 - USDMXN, Fondeo Rate, Headline and Core 6 5 4 Forecast 16 Chinese economic data continues to suggest that the economy is losing momentum, however the pace appears to be decelerating. May trade data was weak as exports fell (on still weak global demand), but the 17.6% year/year fall in imports was more concerning. Although some of the fall can be attributed to lower commodity prices, demand still seems inconsistent with growth anywhere near 7%. Nevertheless, CNY & CNH have remained stable versus the USD and are actually gaining on many trade-weighted measures. We still favour stability in the time before the upcoming IMF SDR decision in October. Stimulus—fiscal and monetary —remain rational responses to slower growth and soft inflation. And, as a result, we expect further easing this year, especially via monetary policy. As broad USD strength may reappear, look for stability in USDCNY and USDCNH to dominate as we approach the IMF SDR decision. 14 12 3 2 1 10 8 0 6 Aug-10 Nov-11 Jan-13 Mar-14 Jun-15 Aug-16 Oct-17 CPI inflation (y/y %, Left) Core inflation (y/y %, Left) Fondeo rate (Left) USD/MXN (Right) Source: Banxico, Bloomberg, CIBC expects), we do not expect these numbers to materially affect Banxico’s policy decisions. Banxico decided to keep the overnight rate at 3.0% at its June 4th meeting. The policy announcement was similar to the most recent inflation report. With inflation almost at the central bank’s 3.0% target, Banxico does not anticipate any inflationary pressures from aggregate demand and projects inflation to remain slightly below 3% for the remainder of 2015. Despite Challenges, KRW Still Firm on Portfolio Flows The BoK cut its policy rate on June 11th, taking the 7-day repo rate to a record low 1.50%. The easing was in response to a number of economic challenges, especially weak external demand (in particular China) as May exports contracted 10.9% year/year. An outbreak of MERS in the country is also concerning policymakers. President Park has called on the government to respond to both export and MERS concerns. Through the challenges, KRW has been somewhat shielded by continued strong portfolio inflows (Chart 9). Overall, the economy is doing okay, but not spectacularly, with Q1 GDP at 2.5% year/year, while the latest monetary easing should provide some measure of support for the economy. As USD gains may broaden in the coming months, stable portfolio inflows should see the KRW only gain on a trade-weighted basis but lose ground against the greenback. Nevertheless, look for ongoing strength in KRW versus the JPY. The balance of inflation risk remained unchanged from the previous rate announcement and continues to be tilted to the downside and, although Banxico revised down its 2015 GDP forecast, policy still remains very dependent on the Fed. The minutes point to Banxico reacting after the Fed since “moving before would incur more costs than benefits.” Hence, we expect the central bank to raise the overnight rate late in 2015 Q3, in tandem with any US Fed rate action, and to end 2015 at 3.5%. That should allow the peso to moderately strengthen versus the USD. Of note, June interim congressional elections brought few changes in Lower House representation. A government coalition of PRI, PVEM and Nueva Alianza will have 42.3% of the votes corresponding to between 246 and 263 representatives in a Lower House of 500. To know if the ruling coalition will have an absolute majority, the final computation of the 300-majority district and the assignment of 200 representative deputies is needed. The calculation began this week, but in all likelihood the ruling coalition has at least 251 representatives. 6 CIBC World Markets Inc. Monthly FX Outlook - June 18, 2015 Chart 9 - South Korean Portfolio Inflows Remains Strong 60000 50000 $mln $mln $mln $mln ytd ytd ytd ytd Chart 10 - Widening of Asian CDS Pressuring IDR and MYR 200 2012 2013 2014 2015 180 160 40000 140 30000 120 100 20000 80 60 10000 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Indonesia 5yr CDS -10000 Malaysia 5yr CDS Source: Bloomberg, CIBC Source: Bloomberg, CIBC INR Pressured on Higher Global Yields sentiment. As a result, Malaysian 5-year CDS are now at their highest level since January (Chart 10), while foreign ownership hedging and the unwinding of Malaysian bond positions has contributed to the MYR underperformance. Looking ahead, these factors remain key watch points. However, a recovery in commodity prices and global demand would see MYR regaining some lost ground. USDINR is threatening to breakout above its recent trading range of 61.30–64.30 that has held since early January. Portfolio inflows that began the year in positive territory have recently tapered off and the withdrawal and/or hedging of those flows has put pressure on the INR. In addition, the RBI cut rates for the third time in early June. We see risks of EURINR depreciating further in the coming weeks as global bond yields remain firm. With the RBI having room to ease further and a renewal of threats from the external environment, INR is also vulnerable to losses on weakened sentiment and portfolio outflow over the coming months. Uncertainty around the external environment (yields and demand) and how it might be impacted by the Fed’s rate hikes leaves INR on the defensive, but potentially offering value in the high 60s range versus the USD. IDR Weighed Down by Uncertainty The rupiah has been Asia’s weakest currency year-todate. It has given up 7.4% versus the USD and moved to levels not seen since 1998. Disappointing economic data and the fact that economic reform has not proceeded as hoped following the presidential election have weighed on sentiment. While higher global bond yields and the withdrawal of portfolio flows are driving the depreciation in the IDR. That weakness may have restrained the Bank of Indonesia at its meeting this week from delivering monetary easing to help the economy since it would likely have worsened the currency’s slide. MYR Correction Not Sustained The MYR saw a brief period of recovery against the USD and regional peers, however it is once again depreciating as a result of negative domestic sentiment, higher global bond yields and equity caution—all of which have also been reflected in weaker portfolio inflows. Our previous expectation that this underperformance against the USD and regional peers would correct has not come to fruition. April trade data was weak and IP for the same month was soft in tandem. Despite that, fundamentals of the Malaysian economy (GDP growth of 6.0% in 2014 and 5.0-5.5% expected for 2015) look solid enough, but have been overshadowed by domestic political and policy uncertainty and negative investor The government is dragging its feet on reforms and needs to deliver stimulus this year and not next year as the finance minister recently suggested. There is ample room in the budget with the fiscal deficit target less than 2%. The BI also needs to work with the government and provide monetary easing. Unless the rise in global bond yields is arrested, Indonesia could witness further pressures akin to those during the ‘taper tantrum’. Credit default swaps are already at year-to-date highs. 7 CIBC World Markets Inc. Interest Rate and Monthly FX Outlook - June 18, 2015 Economic Outlook End of period: 2015 III 2015 IV 2016 I 2016 II 2016 III 0.75 0.75 0.75 1.00 Canada Overnight target rate 0.75 2-Year Gov't Bond 0.70 0.90 1.20 1.35 1.50 10-Year Gov't Bond 1.90 2.10 2.00 2.15 2.55 Federal Funds Rate 0.38 0.63 0.88 0.88 0.88 US 2-Year Gov't Note 1.00 1.05 1.30 1.40 1.50 10-Year Gov't Note 2.60 2.85 2.70 2.75 2.95 0.05 0.05 0.05 0.05 0.05 Eurozone Refin.operations rate 2-Year Gov't Bunds -0.15 -0.10 0.00 0.05 0.05 10-Year Gov't Bunds 0.50 0.55 0.60 0.70 0.70 Bank rate 0.50 0.50 0.75 1.00 1.25 UK 2-Year Gilts 0.65 0.85 1.10 1.35 1.70 10-Year Gilts 2.10 2.20 2.35 2.45 2.60 Overnight rate 0.10 0.10 0.10 0.10 0.10 Japan 2-Year Gov't Bond 0.05 0.10 0.10 0.10 0.10 10-Year Gov't Bond 0.40 0.45 0.50 0.50 0.55 Canada US Eurozone UK Japan Real GDP growth (%) Unemployment rate (%) CPI (%) Real GDP growth (%) Unemployment rate (%) CPI (%) Real GDP growth (%) Unemployment rate (%) CPI (%) Real GDP growth (%) Unemployment rate (%) CPI (%) Real GDP growth (%) Unemployment rate (%) CPI (%) 2014 2.4 6.9 1.9 2.4 6.2 1.6 0.9 11.6 0.4 2.8 6.3 1.5 -0.1 3.6 2.7 2015 1.4 6.8 0.9 2.4 5.3 0.6 1.7 11.1 0.0 2.0 5.4 0.5 1.0 3.5 0.9 2016 2.7 6.6 2.2 2.5 5.0 2.7 2.2 10.5 1.6 2.4 5.1 1.9 1.2 3.4 1.3 This report is issued and approved for distribution by (a) in Canada, CIBC World Markets Inc., a member of the Investment Industry Regulatory Organization of Canada, the Toronto Stock Exchange, the TSX Venture Exchange and a Member of the Canadian Investor Protection Fund, (b) in the United Kingdom, CIBC World Markets plc, which is regulated by the Financial Services Authority, and (c) in Australia, CIBC Australia Limited, a member of the Australian Stock Exchange and regulated by the ASIC (collectively, “CIBC”) and (d) in the United States either by (i) CIBC World Markets Inc. for distribution only to U.S. Major Institutional Investors (“MII”) (as such term is defined in SEC Rule 15a-6) or (ii) CIBC World Markets Corp., a member of the Financial Industry Regulatory Authority. 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