Strathclyde Associates Foreign Exchange Markets October 2010 Part 1: Uncertainty has remained the predominant feature of the foreign exchange markets over the past month. The sovereign debt crisis in Europe has clearly not been resolved; and there has been further evidence of the conflicting views of the central bankers about the most appropriate measures to correct the current problems, with the Fed primarily interested in maintaining the momentum in the US economy, and the European Central Bank and the Bank of England more anxious to tighten fiscal policy to reduce the size of outstanding fiscal deficits.

The strength of the major European bond markets must therefore also be viewed with some concern. The gilt edged market has followed the pattern of other markets and has also improved again over the past month.

The major government bond markets have made further significant gains over the past month, despite the massive fiscal deficits around the world, and the renewed concerns about the possibility of sovereign debt defaults in Europe.

The major government bond markets have made further significant gains over the past month, despite the massive fiscal deficits around the world, and the renewed concerns about the possibility of sovereign debt defaults in Europe.

Strathclyde Associates: Taking A Look at Taiwan’s Economy - Taiwan is recovering rapidly from last year’s recession. Its semi-conductor industry is doing well and there is very little inflationary pressure in the economy.

Brazil’s economic output dipped a tiny 0.2% in 2009 and is on course to grow by about 6% — well above the 4.5% or so that many economists regard as the potential or noninflationary rate — in 2010.

Taking A Look at South Korea’s Economy: Strathclyde Associates - Korea is set to grow about 5% this year, faster than the Bank of Korea’s December forecast of 4.6%.

“Strathclyde Associates” Taking A Look - China’s Economy: China ran its first monthly trade deficit in six years in March.

China’s economy expanded 11.9% from a year earlier in the first quarter of 2010, a strong result highlighting both the strength of the recovery in China and the increasing risks of overheating.

India’s economy is expected to grow 8.2% this fiscal year, and accelerate to 9% next year, powered by rising local demand, a robust rebound in manufacturing activity and investment in infrastructure.