MARKET DRIVERS – CURRENCIES

FX Research • 27.07.2010 • Jyske Markets

Today’s Comment over the past 13 months. Consumer Today’s Chart – US Consumer confidence (Conference Board)
confidence is still below the historical average,
The English version of our July/August issue of
and that indicates that the US consumers are
FX-Spot On will be published very soon. We
still cautious. Even though the recent turmoil
have raised our 3-month forecast for EUR/USD
to 1.23, as the worst panic relating to the euro
in the financial markets may have a somewhat 150
negative effect, the headwind that consumers
zone debt crisis seems to have abated. We
have been facing is gradually changing to a 140
assess, however, that there is a certain risk we
will see renewed political turmoil after the
slight tailwind, and therefore we expect a 130
moderate increase in consumer confidence in
summer and maintain therefore our negative
July. Yet, disappointing figures will add to the 120
view of the cross rate in the short term.
budding concerns about another downturn in 110

Index (1985 = 100)

However, for the slightly longer term we still
the US economy (a so-called W-turn), and that
expect that the euro will gain further ground
may result in renewed pressure on the dollar. 100 Mean
as the political risks diminish and the risk
premium for the euro will be reduced.
Technically, we assess that EUR/USD will see 90
resistance at about 130.25 (equalling last
Moreover, we think the discussion about fiscal 80
week’s peak), but if this level is breached,
tightening on the other side of the Atlantic will
there will initially be scope for a decline of the 70
put pressure on the dollar towards the end of
dollar down towards 130.95-131 against the
the period covered by our forecast. 60
euro.

With respect to economic indicators,

50
Today’s Key Events
consumer confidence in the US will today be 40
scrutinized. The US consumer confidence fell • 08:00 GfK consumer confidence (DEM)
drastically in June, and this led to concerns • 09:30 Producer prices (SEK) 30
that the consumers will not be able to take on • 10:00 M3 money supply (EUR) 20
the role as growth engine when the temporary • 15:00 CaseShiller house prices (USD)
86 88 90 92 94 96 98 00 02 04 06 08 10
stimuli expire in the autumn. We point out, • 16:00 Conference Board Consumer
however, that the decline is seen after a 3- confidence (USD)
month period of increases and that consumer
confidence is still in the range we have seen Source: Reuters EcoWin

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MARKET DRIVERS – CURRENCIES
FX Research • 27.07.2010 • Jyske Markets

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

target
Majors
EUR/USD 130.04 Focus on internal imbalances in the euro zone, political disagreement and pressure on Southern European govt. bonds sent down EUR - Resistance 130.25 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 573.18 Focus on internal imbalances in the euro zone, political disagreement and pressure on Southern European govt. bonds sent down EUR + Resistance 597.16 next 601.02
The US is somewhat ahead of Europe in the economic cycle, and for some time economic indicators have shown good trends + Support: 572.18 next 568.90 606
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 83.89 Focus on very negative public finances: Uncertainty about future fiscal tightening (and UK’s rating) may weaken pound sterling + Resistance 83.95 next 85.30
Pound sterling was under massive pressure when the financial crisis peaked, and (too) much misery has already been discounted - Support: 83.15 next 82.10 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 888.45 Focus on very negative public finances: Uncertainty about future fiscal tightening (and UK’s rating) may weaken pound sterling - Resistance 896.28 next 907.75
Pound sterling was under massive pressure when the financial crisis peaked, and (too) much misery has already been discounted + Support: 887.74 next 873.69 903
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 113.11 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 113.45 next 114.40
Risk of renewed risk aversion supports JPY slightly - Support: 111.40 next 110.00 110
Decent growth in recent months; the economy is, however, still fragile; low growth ahead and deflation may once again be a theme +
JPYDKK 6.59 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 6.69 next 6.78
Risk of renewed risk aversion supports JPY slightly + Support: 6.57 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 136.48
Please refer to the publication, CHF: stil moving upwards -

CHFDKK 546.11
Please refer to the publication, CHF: stil moving upwards -
MARKET DRIVERS – CURRENCIES
FX Research • 27.07.2010 • Jyske Markets

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

target
Scandinavia
EURNOK 799.25 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 93.19 Continuing improvement of key indicators in Norway: labour market is strong and housing market is close to its record-high levels + Resistance 93.74 next 94.58
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: 91.78 next 91.11 93.10
Correction in the equity market/rising risk aversion will still be able to put pressure on the NOK -
EURSEK 946.99 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 78.67 Still risk that SEK will suffer a blow in the event of risk aversion + Resistance 79.71 next 80.57
Riksbanken expresses optimism about the economy and thinks Sweden has been through the worst part of the crisis - Support: 77.23 next 76.05 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 • 27.07.2010 • 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 • 27.07.2010 • Jyske Markets

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