MARKET DRIVERS – CURRENCIES

FX Research • 21.07.2010 • Jyske Markets

Today’s Comment
Today Fed’s Bernanke appears before the
Senate to give his semi-annual address. The
address discusses the general economic
development and reflects the views of the
entire Fed committee. The markets are
anxiously awaiting the address as generally
the US indicators have disappointed lately,
and as the conclusions in the minutes from
the most recent Fed meeting reflected
concerns about the economic situation.
Moreover the minutes indicated that the Fed
will consider further easing of the monetary
policy if the situation deteriorates, and
therefore questions will undoubtedly be asked
about the rather sombre statements from the
meeting – whether the Fed's view of the of the
economic situation is unchanged or whether
its concerns have grown since the last
interest-rate meeting a month ago. If
Bernanke suggests that further monetary-
policy easing is in the offing, interest rates
may come under pressure and it may add to
the problems for the dollar. And indeed,
yesterday the dollar got off to a weak start
against the euro, but the euro had problems
maintaining the positive momentum, and
when EUR/JPY began to fall, EUR/USD fell
correspondingly as stop-loss orders were
executed. However, so far the cross rate has
found support at about 128.40, i.e. the peak of Today’s Chart – EUR/USD
the rising trend channel in which the cross
traded until recently. If we see a breach on the
downside, the next major point of support will
be at about 128, but if the dollar falls again,
we will presumably see a test of yesterday’s 1,32
peak at about 130.25 for EUR/USD before 4-hour chart
long. 1,30
NOK has been under massive pressure against
EUR in recent days, but did not manage to 1,28
breach up through the 233-day moving
average. This morning EUR/NOK is still falling 1,26
and has breached the 200-moving average.
Technically, this indicates that we may see a 1,24
test of the 55-day average at about 795 in the
coming days. Liquidity in the markets is,
1,22
however, thin at the moment (often the case
in the summer) and we may therefore still see
fairly strong price fluctuations 1,20
Today’s Key Events
07:00 Q2 accouunts from Nordea (SEK) 1,18
10:30 Minutes of monetary-policy meeting 26 May 2 Jun 9 Jun 16 Jun 23 Jun 30 Jun 7 Jul 14 Jul 21 Jul
at the Bank of England (GBP)
14:00 Q2 accounts from Morgan Stanley EUR/USD Moving Average (55) Moving Average (233)
(USD)
14:00 Q2 accounts from Wells Fargo (USD)
16:00:00 Fed’s Bernanke appears before
Source: Bloomberg/Jyske Bank
the Senate (USD)

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Jyske Markets Helle Varming Read more FX and interest rate analyses at www.jyskemarkets.com
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MARKET DRIVERS – CURRENCIES
FX Research • 21.07.2010 • Jyske Markets

Currency Spot Short-term market drivers Technical levels 1-month

target
Majors
EUR/USD 128.78 Focus on internal imbalances in the euro zone, political disagreement and pressure on Southern European govt. bonds sent down EUR - Resistance 130.00 next 131.00
The US is somewhat ahead of Europe in the economic cycle, and for some time economic indicators have shown good trends - Support: 124.80 next 124.00 123
The Fed’s quantitative easing keeps the USD value low; higher government debt does not result in increases in the US market rate as it should +
USDDKK 578.66 Focus on internal imbalances in the euro zone, political disagreement and pressure on Southern European govt. bonds sent down EUR + Resistance 597.06 next 600.91
The US is somewhat ahead of Europe in the economic cycle, and for some time economic indicators have shown good trends + Support: 573.18 next 568.80 606
The Fed’s quantitative easing keeps the USD value low; higher government debt does not result in increases in the US market rate as it should -
EURGBP 84.26 Focus on very negative public finances: Uncertainty about future fiscal tightening (and UK’s rating) may weaken pound sterling + Resistance 85.30 next 86.00
Pound sterling was under massive pressure when the financial crisis peaked, and (too) much misery has already been discounted - Support: 84.20 next 83.25 82.50
We expect that the quantitative easing came to an end in February and that the BoE will start normalising its monetary policy in H2 -
GBPDKK 884.16 Focus on very negative public finances: Uncertainty about future fiscal tightening (and UK’s rating) may weaken pound sterling - Resistance 884.95 next 895.05
Pound sterling was under massive pressure when the financial crisis peaked, and (too) much misery has already been discounted + Support: 873.54 next 866.43 903
We expect that the quantitative easing came to an end in February and that the BoE will start normalising its monetary policy in H2 +
EURJPY 112.21 Focus on debts in Southern Europe has caused pressure on the single European currency and shifted the balance of power between EUR and JPY - Resistance 113.00 next 114.40
Risk of renewed risk aversion supports JPY slightly - Support: 109.15 next 107.50 110
Decent growth in recent months; the economy is, however, still fragile; low growth ahead and deflation may once again be a theme +
JPYDKK 6.64 Focus on debts in Southern Europe has caused pressure on the single European currency and shifted the balance of power between EUR and JPY + Resistance 6.83 next 6.93
Risk of renewed risk aversion supports JPY slightly + Support: 6.59 next 6.51 6.77
Decent growth in recent months; the economy is, however, still fragile; low growth ahead and deflation may once again be a theme -
EURCHF 135.70
Please refer to the publication, CHF: stil moving upwards -

CHFDKK 549.06
Please refer to the publication, CHF: stil moving upwards -
MARKET DRIVERS – CURRENCIES
FX Research • 21.07.2010 • Jyske Markets

Currency Spot Short-term market drivers Technical levels 1-month

target
Scandinavia
EURNOK 803.45 Continuing improvement of key indicators in Norway: labour market is strong and housing market is close to its record-high levels - Resistance 812 next 818
Norges Bank was one of the first ones to raise its interest rate. Even though we may be in for a slow start, we foresee 3% in the 1-year term - Support: 795 next 788 800
Correction in the equity market/rising risk aversion will still be able to put pressure on the NOK +
NOKDKK 92.73 Continuing improvement of key indicators in Norway: labour market is strong and housing market is close to its record-high levels + Resistance 93.73 next 94.56
Norges Bank was one of the first ones to raise its interest rate. Even though we may be in for a slow start, we foresee 3% in the 1-year term + Support: 91.77 next 91.09 93.10
Correction in the equity market/rising risk aversion will still be able to put pressure on the NOK -
EURSEK 947.41 Still risk that SEK will suffer a blow in the event of risk aversion - Resistance 965 next 980
Riksbanken expresses optimism about the economy and thinks Sweden has been through the worst part of the crisis + Support: 935 next 925 980
After GDP for Q2, Q3 and Q4 2009 has been revised up, an interest-rate hike in July is very likely +
SEKDKK 78.63 Still risk that SEK will suffer a blow in the event of risk aversion + Resistance 79.69 next 80.56
Riksbanken expresses optimism about the economy and thinks Sweden has been through the worst part of the crisis - Support: 77.22 next 76.03 76.00
After GDP for Q2, Q3 and Q4 2009 has been revised up, an interest-rate hike in July is very likely -
MARKET DRIVERS – CURRENCIES
FX Research • 21.07.2010 • Jyske Markets

Current Strategies
Currency Strategy Description of Strategy Date of Entry Target Stop READ
Entry Level Loss MORE

Due to deflation in Japan, BoJ will keep rates unchanged for quite som time into 2011
USD/JPY Option Widening of the interest-rate spread to the US and the euro zone, among others, will put the yen under pressure 16-12-2009 89.68 106 N/A CLICK HERE
In the long term, the dollar will strengthen due to a faster economic recovery and stronger rate hikes in the US

Please note: We point out that FX investment is currently associated with extraordinarily high uncertainty.
But for long-term risk tolerant investors, there may be good investment opportunities in these turbulent
times. This recommendation is only relevant for very risk-tolerant clients with the right risk profile and the
overall financial strength to cope with any loss that may be incurred.
MARKET DRIVERS – CURRENCIES
FX Research • 21.07.2010 • Jyske Markets

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