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presentation Danske Bank

VIEWS: 2 PAGES: 28

									     FX Forecast Update
     June: Global recession fears to send EUR/USD lower again
     Arne Lohmann Rasmussen
     Chief Analyst, Head of Rates, FX and Commodities Strategy

     Kasper Kirkegaard                                                                Stefan Mellin
     Senior Analyst                                                                   Senior Analyst
     John M. Hydeskov                                                                 Morten Thrane Helt
     Chief Analyst                                                                    Senior Analyst

     www.danskebank.com/research                                                      Bloomberg: DRFX <GO>



                                                                                                             www.danskeresearch.com
Important disclosures and certifications are contained from page 22 of this report.
Main forecast changes

• The US recovery was one of the most important factors behind the positive market environment earlier
  in the year and what helped keep EUR/USD above 1.30 during February, March and April. Recent
  months have brought indications of a slowdown in the US, however, and we see it as highly likely that
  disappointing US data over the coming months will cause markets to price a higher recession risk.
• This should weigh on the cyclical currencies and not least on EUR/USD. As a result, and because of the
  worsening EMU crisis, we have opted to add dollar strength to our forecast. We now look for EUR/USD
  to trade at 1.24 in 3M, 1.26 in 6M and 1.30 in 12M. The upwards trend in our forecast profile reflects
  our expectation of a significant monetary easing from the Fed as well as the still dollar negative US
  balance of payments situation.
• We have also pencilled in near term weakness in AUD, NZD and CAD, but consider downside risks to
  these currencies as lower than downside risks to the EUR, as (i) the commodity currencies have
  already seen a large sell-off, (ii) we expect the main part of the commodity price correction to be behind
  us, (iii) positioning is stretched – IMM has indicated net AUD shorts at October 2008 levels, and (iv) as
  economic data has surprised positively lately in not least Australia.
• We expect the BoJ to move in a substantially more dovish direction over the next year - not least after
  the latest IMF report concluded that JPY is overvalued from a medium term perspective. We expect
  BoJ easing to support USD/JPY but have lowered our 12M forecast on USD/JPY as QE from the FED
  is likely to counter some of the effect from Japanese easing. We now see USD/JPY at 79 in 3M, 84 in
  6M and 87 in 12M.
                                                                                      www.danskeresearch.com   2
EUR/USD – Renewed downside expected
• Growth: The US economy has clearly                           Forecast: 1.24 (3M), 1.26 (6M) and 1.30 (12M)
  outperformed in recent quarters, but is now                   1.60
                                                                                                                EUR/USD
  slowing. Europe remains caught in a near zero                 1.50
                                                                1.40
  growth environment.                                           1.30

• Monetary policy: Both the ECB and Fed is                      1.20
                                                                1.10
  expected to ease monetary policy during summer,               1.00
                                                                   Jun-11           Sep-11   Dec-11 Mar-12 Jun-12             Sep-12   Dec-12 Mar-13 Jun-13
  but timing is uncertain.
• Flows: The current account deficit is much bigger
                                                                        75% conf. int.          50% conf.int.      Forward        Danske fcst   Consensus fcst


                                                               EUR/USD                          1M                 3M                  6M           12M
  in the US, but the EuroZone has seen a                       Forecast (pct'ile)            1.23 (23%)         1.23 (29%)        1.25 (39%)     1.30 (54%)

  deterioration in the BBoP – reflecting a long term           Fwd. / Consensus
                                                               50% confidence int.
                                                                                             1.26 / 1.28
                                                                                             1.23 / 1.29
                                                                                                                1.26 / 1.25
                                                                                                                1.22 / 1.32
                                                                                                                                  1.26 / 1.25
                                                                                                                                  1.20 / 1.34
                                                                                                                                                 1.27 / 1.25
                                                                                                                                                 1.17 / 1.38
  capital outflow (at highest pace during the EMU              75% confidence int.           1.20 / 1.31        1.17 / 1.34       1.13 / 1.38    1.06 / 1.44


  crisis).                                                     Source: Danske Markets




• Valuation: EUR/USD is trading around neutral                 • Conclusion: The US slowdown is likely to see
                                                                    markets price an even higher risk of a global
  levels according to both our short- and long-term
                                                                    recession, which should sustain pressure on risk
  models (PPP estimate is 1.28).
                                                                    assets and EUR/USD. Our main expectation is,
• Risks: Tail-risks remain skewed to the downside.                  however, for a policy response from both the ECB
  However, stretched short EUR positioning in the                   and Fed which should mitigate downside risks and
  market and uncertainty about the relative timing of               help to stabilise EUR/USD at lower levels. In the
  a Fed and ECB response implies that upside risks                  longer term our main scenario is for EUR/USD to
  to exist.                                                         trade closer to, but below, medium term fair value.
                          Senior Analyst: Kasper Kirkegaard, kaki@danskebank.com, +45 4513 70 18
                                                                                                                              www.danskeresearch.com             3
EUR/USD – Important issues to watch
• Weaker macro, high event risks, and CB responses                     Eurozone financial stress index
  − Most fundamental drivers are working against the euro at
    the moment:
  − The EMU crisis means that investors are likely to keep
    pricing a high risk premium on the euro and unlike the first
    stages of the crisis there is now signs of net long term
    capital outflow.
  − The global economy is slowing and while the US was the
    bright spot over recent quarters it has become evident that
    growth is slowing abroad as well. Higher global recession
                                                                       Source: Reuters EcoWin, Danske Markets
    risks is likely to weigh on EUR/USD.
                                                                       Speculative investors remain short EUR/USD
  − The ECB is expected to ease monetary policy by lowering             60                                                                   60
                                                                           % of open interest
    the lending rate and potentially also introduce further /           50
                                                                        40
                                                                                                        Non-commercial EUR positions
                                                                                                                                             50
                                                                                                                                             40
    expand non-conventional measures. Monetary policy over              30                                                                   30
                                                                        20                                                                   20
    the coming quarters is not necessarily euro negative,               10                                                                   10
    however. If the Fed also ease the net effect on the euro from        0                                                                    0
                                                                       -10                                                                  -10
    ECB and Fed easing could easily prove positive.                    -20                                                                  -20
                                                                       -30     +/- 1 stdev from mean                                        -30

• ...But positioning remains stretched                                 -40
                                                                       -50
                                                                                                                                            -40
                                                                                                                                            -50
                                                                       -60                                                                  -60
  − The above negative euro drivers is reflected in our 1.24 3M               06          07       08       09        10        11     12

    forecast. However, positioning is stretched and likely to
    reduce downside euro risks.                                        Source: Reuters EcoWin, Danske Markets

                              Senior Analyst: Kasper Kirkegaard, kaki@danskebank.com, +45 4513 70 18
                                                                                                                  www.danskeresearch.com          4
USD/JPY – BoJ easing to support USD/JPY
• Growth: Japan’s economy expanded 1.2% in the                Forecast: 79(3M), 84 (6M) and 87 (12M)
  first quarter and domestic demand is likely to               90.0                                         USD/JPY


  remain on a recovery trend supported by the                  85.0

  increase in public spending for rebuilding. However,         80.0

  downside risks related to the development in                 75.0
  Europe is substantial.                                       70.0

• Monetary policy: Bank of Japan kept interest rate
                                                                 May-11 Aug-11            Nov-11       Feb-12   May-12 Aug-12      Nov-12   Feb-13


  and its asset purchase programme unchanged on                        75% conf. int.       50% conf.int.       Forward     Danske fcst     Consensus fcst


  June 15. We expect the central bank to move in a            USD/JPY                       1M                  3M              6M              12M
                                                              Forecast (pct'ile)         79.0 (29%)         79.0 (39%)       84.0 (79%)      87.0 (82%)
  substantially more dovish direction over the next           Fwd. / Consensus           80.0 / 81.0        80.0 / 81.8      80.0 / 82.3     80.0 / 85.3

  year. We see a chance that BoJ easing could                 50% confidence int.
                                                              75% confidence int.
                                                                                         78.8 / 81.2
                                                                                         77.9 / 82.2
                                                                                                            77.7 / 82.1
                                                                                                            76.0 / 84.0
                                                                                                                             76.4 / 83.1
                                                                                                                            73.8 / 86.1
                                                                                                                                             74.4 / 84.5
                                                                                                                                             70.3 / 89.1

  become relative aggressive - not least after the              Source: Danske Markets

  latest IMF report that concludes that JPY is              • Conclusion: USD/JPY has traded lower from its
  overvalued in a medium term perspective.                       March high, as disappointing macro data has
                                                                 raised renewed growth concerns and continued
• Debt risks: Since Japan’s debt of 200+% of GDP is              euro zone woes have shaken investor confidence.
  domestically held, this does not seem to be a near-
                                                                 We expect the negative sentiment to support the
  term issue despite weaker external balances.
                                                                 yen in near term and we see USD/JPY at79 in one
• Valuation: PPP estimate around 84.                             month time. Going forward, however, we expect
• Risks: Aggressive BoJ easing cloud take USD/JPY                USD/JPY upside to unfold, as the BoJ eases
  higher while weaker sentiment is a downside risk.              monetary policy further and the global macro
                                                                 picture becomes brighter.
                           Senior Analyst, Morten Helt, mohel@danskebank.com, +45 4512 85 18
                                                                                                                          www.danskeresearch.com             5
 USD/JPY – important issues to watch
• BoJ to move in a substantially more dovish direction                 USD/JPY correlation with risk has turned positive
  − The BoJ board is poised to move in a substantially more              0.6                                                                                           0.6
                                                                         0.5                                                                                           0.5
    dovish direction over the next year, as parliament is                0.4
                                                                                      S&P500
                                                                                                                                                                       0.4
    increasingly trying to influence the composition of the board.       0.3
                                                                                                                     Nikkei
                                                                                                                                                                       0.3
                                                                         0.2                                                                                           0.2
    Two doves have been nominated for the two seats currently            0.1                                                                                           0.1
    vacant and next year board governor Masaaki Shirakawa’s              0.0                                                                                           0.0
                                                                         -0.1                                                                                         -0.1
    term will expire. This increases the likelihood that BoJ easing      -0.2                                                                                         -0.2
    could become even more aggressive.                                   -0.3                MSCI wld.                                                                -0.3
                                                                         -0.4                                                                                         -0.4
  − The latest report on the yen from the IMF suggests that the          -0.5                                                                                         -0.5
                                                                                May Jun      Jul    Aug    Sep      Oct   Nov      Dec   Jan   Feb   Mar    Apr May
    currency looks overvalued from a medium-term perspective.                                             11                                         12
                                                                       Source: Reuters EcoWin and Danske Markets
    The IMF advises the Bank of Japan (BoJ) to ease monetary
    conditions further in order to achieve the central bank’s          Short JPY positions still stretched
    inflation target of 1%.                                              0.5
                                                                                                                                                           USD/JPY
                                                                                                                                                                      130
                                                                                of open interest          << Non-commercial JPY positions
                                                                         0.4                                                                                          125

• Neutral positioning to support upside in USD/JPY                       0.3
                                                                         0.2
                                                                                                                                                                      120
                                                                                                                                                                      115
                                                                         0.1                                                                                          110
  − The latest IMM data, show a reduction in JPY short positions         0.0                                                                                          105
    and market positioning is now relative neutral. Hence, new           -0.1                                                                                         100
                                                                         -0.2                                                                                         95
    build up in short positions could support USD/JPY going              -0.3                                                                                         90
    forward.                                                             -0.4               +/- 1 stdev from mean                                                     85
                                                                         -0.5                                                                                         80
                                                                                                                      USD/JPY spot >>
                                                                         -0.6                                                                                         75
                                                                                     06            07          08             09          10         11       12

                                                                                 Source: CFTC


                                 Senior Analyst, Morten Helt, mohel@danskebank.com, +45 4512 85 18
                                                                                                                                   www.danskeresearch.com                    6
USD/JPY – BoJ easing to support USD/JPY
• Growth: Japan’s economy expanded 1.2% in the                Forecast: 79(3M), 84 (6M) and 87 (12M)
  first quarter and domestic demand is likely to               90.00
                                                                                                           USD/JPY
  remain on a recovery trend supported by the                  85.00

  increase in public spending for rebuilding. However,         80.00

  downside risks related to the development in                 75.00
                                                               70.00
  Europe is substantial.
                                                               65.00
• Monetary policy: Bank of Japan kept interest rate                Jun-11          Sep-11 Dec-11 Mar-12 Jun-12            Sep-12 Dec-12 Mar-13 Jun-13

  and its asset purchase programme unchanged on                        75% conf. int.      50% conf.int.      Forward         Danske fcst   Consensus fcst

  June 15. We expect the central bank to move in a            USD/JPY                      1M                 3M                 6M             12M

  substantially more dovish direction over the next           Forecast (pct'ile)
                                                              Fwd. / Consensus
                                                                                        79.0 (57%)
                                                                                        78.7 / 80.1
                                                                                                           82.0 (83%)
                                                                                                           78.7 / 80.4
                                                                                                                              84.0 (85%)
                                                                                                                              78.7 / 81.7
                                                                                                                                             86.0 (83%)
                                                                                                                                             78.7 / 83.4
  year. We see a chance that BoJ easing could                 50% confidence int.       77.4 / 79.9        76.4 / 80.9        75.3 / 81.9    73.4 / 83.4
                                                              75% confidence int.       76.3 / 81.0        74.6 / 82.7        72.5 / 84.6    69.1 / 87.7
  become relative aggressive - not least after the             Source: Danske Markets

  latest IMF report that concludes that JPY is              • Conclusion: We expect the negative global risk
  overvalued in a medium term perspective.                      sentiment to support the yen in near term and we
                                                                see USD/JPY at79 in one month’s time. Going
• Debt risks: Since Japan’s debt of 200+% of GDP is             forward, however, we expect USD/JPY upside to
  domestically held, this does not seem to be a near-
                                                                unfold, as the BoJ eases monetary policy further
  term issue despite weaker external balances.
                                                                and the global macro picture becomes brighter.
• Valuation: PPP estimate around 84.                            With JPY positioning back in neutral territory new
• Risks: Aggressive BoJ easing cloud take USD/JPY               build up in short positions is likely to support
  higher while weaker sentiment is a downside risk.             USD/JPY going forward.
                           Senior Analyst, Morten Helt, mohel@danskebank.com, +45 4512 85 18
                                                                                                                         www.danskeresearch.com              7
 USD/JPY – important issues to watch
• BoJ to move in a substantially more dovish direction                 USD/JPY correlation with risk has turned positive
  − The BoJ board is poised to move in a substantially more              0.6                                                                                           0.6
                                                                         0.5                                                                                           0.5
    dovish direction over the next year, as parliament is                0.4
                                                                                      S&P500
                                                                                                                                                                       0.4
    increasingly trying to influence the composition of the board.       0.3
                                                                                                                     Nikkei
                                                                                                                                                                       0.3
                                                                         0.2                                                                                           0.2
    Two doves have been nominated for the two seats currently            0.1                                                                                           0.1
    vacant and next year board governor Masaaki Shirakawa’s              0.0                                                                                           0.0
                                                                         -0.1                                                                                         -0.1
    term will expire. This increases the likelihood that BoJ easing      -0.2                                                                                         -0.2
    could become even more aggressive.                                   -0.3                MSCI wld.                                                                -0.3
                                                                         -0.4                                                                                         -0.4
  − The latest report on the yen from the IMF suggests that the          -0.5                                                                                         -0.5
                                                                                May Jun      Jul    Aug    Sep      Oct   Nov      Dec   Jan   Feb   Mar    Apr May
    currency looks overvalued from a medium-term perspective.                                             11                                         12
                                                                       Source: Reuters EcoWin and Danske Markets
    The IMF advises the Bank of Japan (BoJ) to ease monetary
    conditions further in order to achieve the central bank’s          JPY positioning in neutral territory
    inflation target of 1%.                                              0.5
                                                                                                                                                           USD/JPY
                                                                                                                                                                      130
                                                                                of open interest          << Non-commercial JPY positions
                                                                         0.4                                                                                          125

• Neutral positioning to support upside in USD/JPY                       0.3
                                                                         0.2
                                                                                                                                                                      120
                                                                                                                                                                      115
                                                                         0.1                                                                                          110
  − The latest IMM data, show a reduction in JPY short positions         0.0                                                                                          105
    and market positioning is now relative neutral. Hence, new           -0.1                                                                                         100
                                                                         -0.2                                                                                         95
    build up in short positions could support USD/JPY going              -0.3                                                                                         90
    forward.                                                             -0.4               +/- 1 stdev from mean                                                     85
                                                                         -0.5                                                                                         80
                                                                                                                      USD/JPY spot >>
                                                                         -0.6                                                                                         75
                                                                                     06            07          08             09          10         11       12

                                                                                 Source: CFTC


                                 Senior Analyst, Morten Helt, mohel@danskebank.com, +45 4512 85 18
                                                                                                                                   www.danskeresearch.com                    8
EUR/GBP – bottoming out around 0.80
                                                               Forecast: 0.80 (3M), 0.82 (6M) and 0.84 (12M)
• Growth: The UK is in technical recession and                  0.95
  activity probably also shrank in Q2. Private                  0.90
                                                                                                                EUR/GBP


  consumption is low and exports are at risk due to             0.85

  the euro crisis.                                              0.80
                                                                0.75

• Monetary policy: The Bank of England has stopped              0.70
                                                                0.65
  QE and but has instead introduced 6-month                        Jun-11           Sep-11   Dec-11 Mar-12 Jun-12              Sep-12   Dec-12 Mar-13 Jun-13
  liquidity auctions against a broader range of                         75% conf. int.          50% conf.int.      Forward         Danske fcst   Consensus fcst
  collateral. Yields have fallen in response.
                                                               EUR/GBP                          1M                 3M                   6M           12M

• Debt risks: Focus is on the downgrades in the                Forecast (pct'ile)
                                                               Fwd. / Consensus
                                                                                             0.80 (30%)
                                                                                             0.81 / 0.80
                                                                                                                0.80 (34%)
                                                                                                                0.81 / 0.80
                                                                                                                                   0.82 (54%)
                                                                                                                                   0.81 / 0.80
                                                                                                                                                  0.84 (62%)
                                                                                                                                                  0.81 / 0.79
  eurozone but could shift to negative focus on the            50% confidence int.           0.80 / 0.82        0.79 / 0.83        0.78 / 0.84    0.77 / 0.86
                                                               75% confidence int.           0.78 / 0.83        0.77 / 0.85        0.75 / 0.87    0.71 / 0.90
  UK, which runs a bigger deficit than most eurozone
  members, including Italy, Spain and France.                    Source: Danske Markets



• Valuation: From a long-term perspective, sterling            • Conclusion: Investors see sterling as a safe haven
                                                                    from the unstable eurozone but the UK has its own
  is undervalued (PPP around 0.77) . A regime shift
                                                                    problems. UK assets are liquid and have offered
  has probably happened though and EUR/GBP, in
                                                                    good protection so far. Tables can turn though and
  our view, belongs above 0.80.
                                                                    sterling is in our view not a real insurance against
• Risks: Almost anything. The forecast is surrounded                the turmoil in the Euro zone. Strong link between
  with considerable uncertainty and caution is                      USD and GBP persists, but is fading. A relatively
  warranted.                                                        high hedging ratio is recommended.

                         Chief Analyst John Hydeskov, johy@uk.danskebank.com, +44 (0)20 7410 8144
                                                                                                                              www.danskeresearch.com              9
EUR/GBP – important issues to watch
• The Bank of England stops QE...                                   Sterling closely linked with dollar, but fading
  − After purchasing £325bn worth of Gilts, BoE has lost                                            Pound / dollar correlation
                                                                     0,80 Correlation coefficient                                                               0,80
    faith in QE, see “BoE abandons QE – as expected but still                                                                         Correlation coefficient
                                                                     0,75                                                                                       0,75
    controversial”. We do not see gilt purchases returning
                                                                     0,70                                                                                       0,70
    this year.
                                                                     0,65                                                                                       0,65

• ...but introduces more stimulus                                    0,60
                                                                                  GBP/USD correlation using
                                                                                                                                                                0,60

                                                                     0,55         EUR as numeraire (3M rolling)                                                 0,55
  − Bank of England commences its Extended Collateral                0,50                                               10Y average                             0,50
    Term Repo Facility, designed to reduce financial-stability       0,45                                                                                       0,45
    risks arising from a shortage of short-term sterling                    jun jul        aug   sep okt    nov   dec     jan   feb   mar apr       maj   jun
                                                                                                   11                                   12
    liquidity.                                                       Source: Reuters EcoWin, Danske Bank

  − The Bank intends to hold a 6-month ECTR auction at least        Britain lagging behind (GDP since pre-crisis)
    monthly until further notice.
                                                                     102                                                                                        102
                                                                            2008 = 100
  − The BoE and the UK Treasury will start a "funding for            101
                                                                                                      USA
                                                                                                                         Germany                                101
                                                                     100                                                                                        100
    lending" plan within weeks.                                       99                                                                                          99
                                                                                                     France

• Dollar link is fading
                                                                      98                                                                                          98
                                                                      97                                                                                          97
                                                                      96                                                                                          96
  − Still strong, but BoE and Fed follow different strategies.        95                                                                                          95
    UK is more exposed to euro crisis than the US.                    94                                                                     UK                   94
                                                                      93                                                                                          93

• A true safe haven?                                                  92
                                                                                      08               09                 10                  11          12
                                                                                                                                                                  92


  − The UK is on negative outlook from two out the three            Source: Reuters Ecowin, Danske Bank
    large rating agencies and the public deficit remains huge.
                             Chief Analyst John Hydeskov, johy@uk.danskebank.com, +44 (0)20 7410 8144
                                                                                                                                www.danskeresearch.com                 10
EUR/CHF – SNB sticks with its 1.20 minimum target
• Growth: The Swiss economy is under pressure
  from the strong Swiss franc and weaker foreign              Forecast: 1.20 (3M), 1.20(6M) and 1.20 (12M)
  export demand.
• Monetary policy: The SNB left monetary policy
  unchanged at its June meeting and pledged to
  enforce the 1.20 minimum target “with utmost
  determination”.
• Flows: SNB Swiss franc selling should keep
  EUR/CHF stable above 1.20.
• Valuation: The Swiss franc remains overvalued by
  about 13% against the euro according to the
  Danske Bank General PPP model.                              Source: Danske Markets



• Risks: Tail-risks remain skewed to the downside             • Conclusion: Deflation risks mean that the SNB is
  and the market is pricing an increased probability              unlikely to move away from its 1.20 minimum
  of EUR/CHF breaking below 1.20. The minimum                     target – even after the large build-up in FX
  target could be abandoned if inflation becomes a                reserves during May. Should the currency inflow
  concern (currently its not), the build-up in FX                 become too excessive it is likely that the SNB
  reserves becomes a concern, or political support                would introduce new measures (e.g. Negative
  to the SNB fades.                                               rates) but keep the minimum target on EUR/CHF.
                                                                  We expect EUR/CHF to trade at 1.20 for the
                                                                  coming quarters.
                         Senior Analyst: Kasper Kirkegaard, kaki@danskebank.com, +45 4513 70 18
                                                                                                  www.danskeresearch.com   11
EUR/CHF – Important issues to watch
• This is not a currency peg                                           Switzerland still runs a massive C/A surplus
                                                                        350                                                                             100
  − SNB’s minimum target on EUR/CHF is technically no                                              Monthly change           FX reserve         CHF bn
                                                                                                                                                        80
    different from the interventions that the SNB conducted             300

    from March 2009 to mid-2010, although this time the SNB             250
                                                                                                                                                        60

    has announced the level that it will defend. It is important to     200
                                                                                                                                                        40

    note that this is not a currency peg in the traditional sense.                                                                                      20
                                                                        150
    The SNB has not expressed any view on how long it intends                                                                                           0

    to keep the exchange rate floor in place, or as to whether it       100
                                                                                                                                                        -20
    intends to move the target.                                              50                                                                         -40


• 1.20 floor no longer secured by credibility alone                           0
                                                                              Feb-08 Aug-08 Feb-09 Aug-09 Feb-10 Aug-10 Feb-11 Aug-11 Feb-12
                                                                                                                                                        -60

                                                                       Source: Bloomberg, Danske Markets
  − Since the SNB introduced the 1.20 minimum target in
                                                                       Swiss franc still overvalued at 1.20
    September last year it had been able to secure the floor           2.0                                                                                  2.0
    almost only via credibility. FX reserves rose significantly in     1.9                                                                                  1.9
    May, however, in what was likely the third biggest                 1.8                                                                                  1.8
    intervention month on record. In other words, the SNB has          1.7                                    PPP estimate                                  1.7

    lost some of its credibility.                                      1.6                                                                                  1.6
                                                                       1.5                                                                                  1.5
  − The question now is how much currency inflow the SNB will          1.4                                                     EUR/CHF spot                 1.4
    accept before potentially changing policy. As such there is        1.3                                                                                  1.3
                                                                                                  SNB's 1.20 minimum target
    no problem in letting FX reserves rise further, as inflation       1.2                                                                                  1.2

    remains non existing and as authorities are taking measure         1.1
                                                                          90      92   94    96    98    00     02     04      06        08   10   12
                                                                                                                                                            1.1

    to try and address imbalances on the local credit market
    and not least on the housing market.                              Source: Reuters EcoWin, Danske Markets
                              Senior Analyst: Kasper Kirkegaard, kaki@danskebank.com, +45 4513 70 18
                                                                                                                     www.danskeresearch.com                       12
EUR/SEK – relative quality remains SEK supportive
• Growth: We have raised our GDP 2012 forecast                  Forecast: 8.70 (3M), 8.60 (6M) and 8.50 (12M)
  to +0.5% after better than expected Q1. H2 2012                10.00
                                                                                                             EUR/SEK
  will be more challenging given global headwinds.                9.50
  We continue to see sub-trend growth in 2013.                    9.00

• Monetary policy: We expect the Riksbank to leave                8.50

  rates unchanged in July as macro readings have                  8.00
  developed in line with or even better than their                   Jun-11          Sep-11 Dec-11 Mar-12 Jun-12           Sep-12 Dec-12 Mar-13 Jun-13

  forecast. Pricing suggests 50% likelihood of 25bp.                     75% conf. int.      50% conf.int.      Forward       Danske fcst    Consensus fcst



• Fundamentals: Current account posts steady and                EUR/SEK
                                                                Forecast (pct'ile)
                                                                                             1M
                                                                                          9.00 (78%)
                                                                                                                3M
                                                                                                             8.70 (30%)
                                                                                                                                  6M
                                                                                                                               8.60 (27%)
                                                                                                                                                 12M
                                                                                                                                              8.50 (27%)

  significant surpluses. Swedish public debt is low             Fwd. / Consensus
                                                                50% confidence int.
                                                                                          8.87 / 8.93
                                                                                          8.73 / 8.98
                                                                                                             8.89 / 8.91
                                                                                                             8.65 / 9.07
                                                                                                                               8.92 / 8.85
                                                                                                                               8.57 / 9.18
                                                                                                                                              8.99 / 8.80
                                                                                                                                              8.46 / 9.34
  and falling, while euro ditto is high and rising.             75% confidence int.       8.64 / 9.09        8.50 / 9.27       8.34 / 9.47    8.10 / 9.76
                                                                Source: Danske Markets

• Flows: Basic balance positive. Huge inflows to SEK
  government bonds. Commercial demand
                                                                • Conclusion: Quality vs growth – stronger or weaker
                                                                     SEK? The latter has for a long time suggested a
  diminishes but still keep a lid on SEK crosses.
                                                                     weaker SEK but the former has been the dominant
• Valuation: EUR/SEK below L/T average but                           factor. We think this will continue to be the case
  actually still above L/T equilibrium estimates.                    and therefore we keep the EUR/SEK forecast intact
                                                                     at 8.70, 8.60 and 8.50 in 3, 6 and 12 months.
• Risks: Escalating euro crisis could trigger broad-
  based USD buying that also pushes EUR/SEK
  higher. However, if relative quality remains the
  dominant factor it will be SEK supportive.
                           Senior Analyst Stefan Mellin, mell@danskebank.com +46 (0)8 568 805 92
                                                                                                                           www.danskeresearch.com             13
EUR/SEK – important issues to watch
• Risk for further downgrades – but not in Sweden                         SEK one of the “cheapest” AAA
                                                                                                AAA currency misalignment vs EUR
                                                                                                   Percentage deviation from historic mean (1995-)
  − Foreign holdings of SEK government debt touched an all time           -25                                                                                                 -25
    high at 56% in April. Relative quality is a key driver here. We       -20                                                                                                 -20
                                                                                                                                        Stronger
    see a continuation of this theme. The risk of further                 -15                                                                                                 -15

    downgrades among the few European AAA left, leaves                    -10                                                                                                 -10

    Swedish stable AAA in an even more favorable position.                 -5                                                                                                  -5
                                                                                                                                                           GBP (-10%)
                                                                            0                                                                                                  0
• Valuation not yet a hinder for further downside                           5
                                                                                  AUD (23%) CHF (21%) CAD (16%) SGD (14%) NOK (7%)    SEK (2%) DKK (0%)
                                                                                                                                                                               5
                                                                                               Weaker
  − Valuation is one aspect of quality-driven SEK demand. Within           10                                                                                                 10

    the AAA camp some currencies are massively overvalued.
    This is not the case for the SEK, which in addition is backed by      Source: Reuters EcoWin, Danske Markets

    better key fundamentals than most other AAA’s. This should            EUR/SEK vs rate differential
    be factored in by investors going forward.                            -0,2                                                                                                  9,4
                                                                                                                                                EUR/SEK >>
                                                                          -0,3
• The Riksbank rate decision                                              -0,4
                                                                                                                                                                                9,3

                                                                                                                                                                                9,2
                                                                          -0,5
  − We expect the Riksbank to keep rates unchanged on 4 July.                                                                                                                   9,1
                                                                          -0,6
    Domestic data like GDP, labor market and inflation have been          -0,7                                                                                                  9,0
    in line with or even above the Riksbank forecasts. The caveat is      -0,8
    if the euro crisis escalates even further, then we could see a        -0,9
                                                                                                                                                                                8,9

    cut. Market is pricing in 50% probability for 25bp. If repo rate      -1,0
                                                                                                                                                                                8,8
                                                                                 << 2Y swap spread
    is left at 1.5%, it should give some support to SEK. As for the       -1,1                                                                                                  8,7
    rest of the year we expect two more cuts from the Riksbank,                  sep    okt
                                                                                              11
                                                                                                   nov      dec       jan       feb      mar
                                                                                                                                           12
                                                                                                                                                     apr       maj      jun

    which is in line with market pricing and thus SEK neutral.            Source: Reuters EcoWin, Danske Markets

                              Senior Analyst Stefan Mellin, mell@danskebank.com +46 (0)8 568 805 92
                                                                                                                        www.danskeresearch.com                          14
EUR/NOK – still the steady performer
• Growth: Norwegian numbers have continued to be                Forecast: 7.50 (3M), 7.40 (6M) and 7.40 (12M)
  strong in Q2 with upside surprises to retail sales, and        8.50
  PMI and CPI core recently. Mainland growth was well                                                            EUR/NOK
                                                                 8.00
  above trend at 1.1% q/q in Q1. Oil investments are
  very strong, estimated at close to NOK200bn in                 7.50

  2013, up NOK 51bn compared with a similar forecast             7.00
  for 2012 (SSB figures).                                        6.50
                                                                    Jun-11           Sep-11   Dec-11 Mar-12 Jun-12             Sep-12   Dec-12 Mar-13 Jun-13
• Monetary policy: Norges Bank lowered the policy rate
  by 25bp to 1.50% in March. We believe this will be the                 75% conf. int.          50% conf.int.      Forward        Danske fcst   Consensus fcst


  last rate cut given the strong economy. We expect the         EUR/NOK                          1M                 3M                  6M           12M
                                                                Forecast (pct'ile)            7.55 (55%)         7.50 (44%)        7.40 (34%)     7.40 (36%)
  first rate increase in late 2012.                             Fwd. / Consensus              7.54 / 7.55        7.57 / 7.52       7.60 / 7.50    7.67 / 7.50
                                                                50% confidence int.           7.43 / 7.64        7.37 / 7.72       7.30 / 7.83    7.21 / 7.98
• Flows: Norges Bank did not adjust its daily purchase of       75% confidence int.           7.35 / 7.74        7.23 / 7.89       7.10 / 8.06    6.91 / 8.34
                                                                Source: Danske Markets
  foreign currency higher in June despite the revised
  budget showing a smaller oil-corrected deficit.               • Conclusion: We expect EUR/NOK to decline
  Speculative long NOK positions are not particularly                towards 7.40 in 2012. We still see strong
  stretched at the moment.                                           international focus on strong Norwegian
                                                                     fundamentals. Furthermore, we expect Norges Bank
• Valuation: NOK is slightly expensive (PPP 7.98).                   to raise rates. The latest rate cut by Norges Bank
• Risks: New rate cuts, risk aversion and a lower oil                points to a more activist approach to countering too-
  price could put strong upward pressure on EUR/NOK.                 fast NOK appreciation but in the end we believe
  Safe-haven flows add downside pressure.                            Norges Bank will not win the battle. If risk aversion
                                                                     spikes strongly, we do not expect the NOK to
                                                                     perform.
                          Chief Analyst Arne Lohmann Rasmussen, arr@danskebank.com, +45 4512 8532
                                                                                                                               www.danskeresearch.com             15
EUR/NOK – important issues to watch
• Fundamentals support latest move lower in EUR/NOK           Relative rates can explain lower EUR/NOK
  Relative rates can explain the latest moves in               8.3
                                                                     EUR/NOK                            << EUR/NOK                      %-points
                                                                                                                                                    -1.0
                                                               8.2                                                                                  -1.1
  EUR/NOK. This was not the case following the SNB             8.1                                                                                  -1.2
  announcement in September last year, which pushed            8.0                                                                                  -1.3
                                                               7.9                                                                                  -1.4
  the cross significantly lower.                               7.8                                                                                  -1.5

• Changes in NOK flows
                                                               7.7                                                                                  -1.6
                                                               7.6                                                                                  -1.7

  The weekly flow data from Norges Bank indicates that         7.5
                                                                                                    2y swap spread >>
                                                                                                                                                    -1.8
                                                               7.4                                                                                  -1.9
  foreign banks, which we see as a proxy for speculative       7.3                                                                                  -2.0

  money, are not particularly long the NOK. Hence, we            Jun Aug   Oct
                                                                           10
                                                                                 Dec    Feb   Apr     Jun
                                                                                                            11
                                                                                                              Aug   Oct    Dec   Feb   Apr
                                                                                                                                       12
                                                                                                                                              Jun


  believe the risk of profit taking in NOK should be          Source: Reuters EcoWin, Danske Markets
  smaller than the sell-off after the Norges Bank rate         Very strong outlook for oil investments
  cut in March. We still expect Norges Bank to revise
                                                               200000 mn NOK                                                                 200000
  daily purchases of foreign currency higher.                                                                              mn NOK
                                                               175000                                                                        175000
• Rate changes from Norges Bank                                150000                                                                        150000
  Norges Bank surprised the market when rates were             125000                  Oil investment                                        125000
  cut by 25bp on 14 March. The reason was the strong           100000                                                                        100000
  NOK. Hence, given our FX forecasts, further rate cuts          75000                                                                       75000

  cannot be ruled out, which could lead to a more                50000                                                                       50000

  volatile NOK. However, rate hikes might also enter             25000                                                                       25000
                                                                      85           90         95            00       05          10
  the agenda quicker than expected given the very
  strong Norwegian economy and red-hot housing                Source: Norges Bank
  market.
                         Chief Analyst Arne Lohmann Rasmussen, arr@danskebank.com, +45 4512 8532
                                                                                                                          www.danskeresearch.com           16
EUR/DKK – ‘send no more money, please’
• Actual range tighter than official bands: EUR/DKK             Forecast: 7.43 (3M), 7.43(6M) and 7.45(12M)
  trades in a +/-2.25% band around the ERM2 central             7.465
  parity of 7.46038 (7.29252-7.62824). In practice,             7.460
                                                                                                     Central parity
  the central bank has kept EUR/DKK within a much
                                                                7.455
  tighter band of 7.423-7.468 (-0.1% to +0.5%). In
                                                                7.450
  recent years, the Danish central bank has shown a
                                                                7.445
  strong commitment to keeping EUR/DKK stable and
                                                                7.440
  lower than the central parity.                                                               EURDKK
                                                                7.435
• Fast central bank response: After two relatively quiet        7.430
  months, currency inflow returned with a vengeance in
                                                                            07           08            09             10      11      12
  May and after invention equal to DKK30bn
  Nationalbanken slashed rates twice and introduced a                         EUR/DKK Spot           7.46038
                                                                Source: Reuters EcoWin, Danske Markets
  zero-rate policy, as the folio rate was lowered to zero.
  We look for new rate cuts over the summer and                 • Conclusion: We believe Nationalbanken will continue
  forecast that the CD rate will be lowered below zero             to fight any currency inflow into Denmark using both
  next time. The forward discount in EUR/DKK has                   intervention and rate cuts. Rates have already reached
  widened significantly recently. A new rate cut and the           zero and the next step is negative policy rates. We
  next Danish LTRO in September 2012 could put                     forecast that Nationalbanken will eagerly try to avoid
  further pressure on EUR/DKK forwards.                            EUR/DKK falling below 7.43, as it might trigger a new
                                                                   round of speculative inflow. If global financial markets
                                                                   normalise, we should expect a slight upward move in
                                                                   EUR/DKK.

                          Chief Analyst Arne Lohmann Rasmussen, arr@danskebank.com, +45 4512 8532
                                                                                                            www.danskeresearch.com   17
EUR/DKK – important issues to watch
• Danish krone back as safe-haven currency                       DGSs still popular by investors
  Lately we have seen accounts selling EUR/DKK                    40
                                                                        bp          10Y Danish Yield Spread to Germany                              bp
                                                                                                                                                          40

  apparently as a hedge against a eurozone break-up. If           30                                                                                      30
                                                                  20                                                                                      20
  this continues, it could create new downward                    10                                                                                      10
  pressure on EUR/DKK. In 2011, we saw strong                      0                                                                                      0
  inflows into Danish government bonds. It seems that            -10                                                                                     -10

  the inflow is now less, even though DGBs have                  -20                                                                                     -20
                                                                 -30                                                                                     -30
  performed very strongly over the last month.
                                                                 -40                                                                                     -40

• What happens if flows turn around?                                    May   Jun      Jul    Aug Sep
                                                                                                 11
                                                                                                          Oct   Nov   Dec   Jan    Feb Mar Apr May Jun
                                                                                                                                         12
  We cannot rule out that in 2012 foreigners will start          Source: Reuters EcoWin, Danske Markets
  scaling back significantly on holdings of Danish bonds
  and short EUR/DKK positions. If this happens fast, it          The currency reserve rose in May to a new high
                                                                 550                                                                                     550
  could put significant upward pressure on EUR/DKK.              500
                                                                        DKK bn
                                                                                                                                                         500
                                                                 450                                                                                     450
• Negative policy rates the ‘next weapon’                        400                         Currency reserve                                            400

  Until now, Nationalbanken has been able to mitigate            350
                                                                 300
                                                                                                                                                         350
                                                                                                                                                         300
  the inflow into DKK through rate cuts and intervening          250                                                                                     250
                                                                 200                                                                                     200
  in the FX market. However, with policy rates at zero,          150                                                                                     150
  the next move is negative policy rates. In March, it           100                                                                                     100
                                                                   50                                                                                     50
  said it is technically possible to obtain negative rates.         0                                                                                     0
  In such circumstances, the plan is to lower the CD                    78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12

  rate below zero but keep the lending and current               Source: Reuters EcoWin

  account rate above the CD rate. See
  Nationalbanken.dk for further info.
                           Chief Analyst Arne Lohmann Rasmussen, arr@danskebank.com, +45 4512 8532
                                                                                                                                  www.danskeresearch.com       18
AUD/USD – Victim of growth concerns
• Growth: Despite indications of a slowdown in China            Forecast: 0.99(3M), 1.01 (6M) and 1.05 (12M)
  data out Australia have been relative strong. First            1.15
                                                                                                                 AUD/USD
  quarter GDP advanced1.3% QoQ - twice as much as                1.10
                                                                 1.05
  expected.                                                      1.00
                                                                 0.95
• Monetary policy: The RBA lowered interest-rate by              0.90

  25bp to 3.5% on June 5. Further rate cuts by the               0.85
                                                                 0.80
  RBA of as much as 50bp to75bp in 2012 are                         Jun-11           Sep-11   Dec-11 Mar-12 Jun-12              Sep-12   Dec-12 Mar-13 Jun-13

  already priced in the market.                                          75% conf. int.          50% conf.int.      Forward         Danske fcst   Consensus fcst


• Debt risks: Public debt is a mere 23% of GDP in               AUD/USD
                                                                Forecast (pct'ile)
                                                                                                 1M
                                                                                              0.98 (23%)
                                                                                                                    3M
                                                                                                                 0.99 (37%)
                                                                                                                                         6M
                                                                                                                                    1.01 (50%)
                                                                                                                                                      12M
                                                                                                                                                   1.05 (66%)
  Australia and is thus far from US’s triple digits.            Fwd. / Consensus              1.00 / 1.00        1.00 / 1.00        0.99 / 1.00    0.98 / 1.00
                                                                50% confidence int.           0.98 / 1.03        0.97 / 1.04        0.95 / 1.05    0.91 / 1.07

• Flows: According to the weekly IMM data, market               75% confidence int.
                                                                Source: Danske Markets
                                                                                              0.96 / 1.04        0.92 / 1.06        0.88 / 1.08    0.81 / 1.12


  is now speculative net short AUD. Positioning is
  stretched with short AUD at October 2008 levels
                                                                • Conclusion: AUD/USD has been correcting higher
                                                                    over the past weeks as economic data have
• Valuation: AUD/USD remains overvalued by long-                    surprised to the upside. Due to high correlation
  term measures (PPP estimate at 0.77).                             with global risk sentiment near term risks remain
                                                                    skewed to the downside. However, further rate
• Risks: AUD remains highly correlated with global                  cuts are already priced in and long speculative
  risk sentiment and tail-risks remain skewed to the
                                                                    positions are extreme, downside might be limited.
  downside.
                                                                    We look for the AUD to reverse its losses going
                                                                    forward.
                             Senior Analyst, Morten Helt, mohel@danskebank.com, +45 4512 85 18
                                                                                                                               www.danskeresearch.com            19
NZD/USD –RBNZ on hold for now
• Growth: Economic growth slowed in Q4, but is                 Forecast: 0.78(3M), 0.79 (6M) and 0.81 (12M)
  expected to recover in 2012. In that respect,                 0.90                                            NZD/USD

  rebuilding following last year’s natural disasters            0.85
                                                                0.80
  should make a positive impact later this year.                0.75

• Monetary policy: The RBNZ decided to keep rates               0.70
                                                                0.65
  unchanged at 2,5% on June 13. We expect rates                 0.60
  to be on hold for now.                                           Jun-11           Sep-11   Dec-11 Mar-12 Jun-12              Sep-12   Dec-12 Mar-13 Jun-13


• Debt risks: New Zealand has very low public debt,                     75% conf. int.          50% conf.int.      Forward         Danske fcst   Consensus fcst


  but runs a budget deficit and a sizeable current             NZD/USD
                                                               Forecast (pct'ile)
                                                                                                1M
                                                                                             0.77 (27%)
                                                                                                                   3M
                                                                                                                0.78 (41%)
                                                                                                                                        6M
                                                                                                                                   0.79 (49%)
                                                                                                                                                     12M
                                                                                                                                                  0.81 (59%)
  account deficit.                                             Fwd. / Consensus              0.79 / 0.78        0.78 / 0.78        0.78 / 0.78    0.77 / 0.79
                                                               50% confidence int.           0.77 / 0.81        0.75 / 0.82        0.74 / 0.83    0.71 / 0.84

• Flows: According to the weekly IMM data, the                 75% confidence int.
                                                               Source: Danske Markets
                                                                                             0.75 / 0.82        0.72 / 0.84        0.69 / 0.86    0.63 / 0.88


  market is now speculative short NZD.
• Valuation: NZD/USD remains heavily overvalued                • Conclusion: NZD/USD has corrected higher in
                                                                   June after a significant drop in May as
  compared with long-term models (PPP estimate
                                                                   expectations of global policy responses have
  at 0.63), but terms of trade gains and weak US
                                                                   increased. While near term risks remains skewed
  fundamentals justify this.
                                                                   to the downside, we expect NZD/USD to edge
• Risks: NZD remains a high-beta currency and                      higher as global growth outlook and risk sentiment
  should risk sentiment worsen again downside                      improves and increases demand for carry
  risks would be significant.                                      currencies.
                            Senior Analyst, Morten Helt, mohel@danskebank.com, +45 4512 85 18
                                                                                                                              www.danskeresearch.com            20
USD/CAD – Still aiming for sub-parity
• Growth: GDP growth stagnated in the first quarter and           Forecast: 1.02(3M), 1.01 (6M) and 0.98 (12M)
  the Canadian economy is under increasing pressure                1.15                                            USD/CAD
  from the fact that the US economy has slowed.                    1.10
  Consumer spending increased at the slowest pace in               1.05
  three years indicating that the domestic economic                1.00
  recovery is fading.                                              0.95

• Monetary policy: BoC kept its main interest rate on              0.90
                                                                      Jun-11           Sep-11   Dec-11 Mar-12 Jun-12             Sep-12   Dec-12 Mar-13 Jun-13
  hold on June 5 but sounded relative hawkish. In our
  view however, a tighter monetary policy is not                           75% conf. int.          50% conf.int.      Forward        Danske fcst   Consensus fcst

  imminent at this stage. A slow down in the US                   USD/CAD                          1M                 3M                  6M           12M
  economy increases the likelihood of a rate cut by BoC           Forecast (pct'ile)            1.03 (65%)         1.02 (54%)        1.01 (48%)     0.98 (38%)
                                                                  Fwd. / Consensus              1.02 / 1.01        1.03 / 1.01       1.03 / 1.00    1.03 / 1.00
  as the Fed might ease the monetary policy.                      50% confidence int.           1.00 / 1.04        0.99 / 1.05       0.98 / 1.05    0.95 / 1.07
                                                                  75% confidence int.           0.99 / 1.05        0.97 / 1.08       0.95 / 1.10    0.92 / 1.13
• Debt risks: Canadian public finances are healthy, and           Source: Danske Markets

  we expect the CAD to receive support from Canada’s              • Conclusion: Recent CAD-strength has been
  tripple-A debt rating status.                                      interrupted by global growth concerns and lower oil
• Flows: We expect oil prices to support CAD in 2012.                prices and USD/CAD is back above parity. Near term
                                                                     risk remains to the upside, and we expect USD/CAD to
• Valuation: USD/CAD is expensive on PPP measures,                   increase further as a weaker macro economic picture
  but less so than other commodity currencies.                       could trigger speculations of a rate cut from BoC.
• Risks: A large setback in oil prices or a decline in risky         However, in 6-12 months time we see global macro
  asset prices remain the key risks.                                 picture improving and expects USD/CAD to drop back
                                                                     below sub-parity in 12 months time.
                               Senior Analyst, Morten Helt, mohel@danskebank.com, +45 4512 85 18
                                                                                                                             www.danskeresearch.com           21
Danske Markets FX forecasts
                                      Forecast                                Forecast vs forward outright, %
              Spot       +1m        +3m      +6m         +12m              +1m      +3m         +6m         +12m
Exchange rates vs EUR
USD          1.271       1.24       1.24       1.26       1.30             -2.5      -2.5          -1.0         1.8
JPY          100.7        98         98        106        113              -2.6      -2.6          5.4          12.5
GBP          0.809       0.80       0.80       0.82       0.84             -1.1      -1.2          1.1          3.3
CHF          1.201       1.20       1.20       1.20       1.20             -0.1      0.1           0.2          0.6

DKK          7.43        7.43       7.43       7.43       7.45             0.0       0.2           0.3          0.8
NOK          7.54        7.55       7.50       7.40       7.40             0.0       -0.9          -2.7         -3.6
SEK          8.84        9.00       8.70       8.60       8.50             1.6       -2.0          -3.5         -5.3


Exchange rates vs USD
JPY           79.2        79         79         84         87              -0.2      -0.1          6.5          10.4
GBP           1.57       1.55       1.55       1.54       1.55             -1.3      -1.3          -2.1         -1.4
CHF           0.95       0.97       0.97       0.95       0.92              2.5      2.6           1.3          -1.2

DKK           5.85       5.99       5.99       5.90       5.73             2.5        2.7          1.3          -1.1
NOK           5.93       6.09       6.05       5.87       5.69             2.5        1.6          -1.7         -5.4
SEK           6.96       7.26       7.02       6.83       6.54             4.2        0.5          -2.5         -7.1

CAD          1.02       1.03       1.02         1.01       0.98             0.8      -0.3          -1.4         -4.7
AUD          1.01       0.98       0.99         1.01       1.05            -2.8      -1.3          1.4          6.6
NZD          0.79       0.77       0.78         0.79       0.81            -2.7      -1.0          0.8          4.5
Note: GBP, AUD and NZD are denominated in local currency rather than USD

                                                                                            www.danskeresearch.com     22
Danske Markets FX forecasts vs. DKK
                                 Forecast              Forecast vs forward outright, %
             Spot       +1m    +3m      +6m   +12m   +1m      +3m        +6m         +12m
Exchange rates vs DKK
EUR          7.43       7.43   7.43    7.43   7.45   0.0        0.2         0.3          0.8
USD          5.85       5.99   5.99    5.90   5.73   2.5        2.7         1.3         -1.1
JPY          7.38       7.58   7.58    7.01   6.59   2.7        2.8        -4.8        -10.4
GBP          9.19       9.29   9.29    9.06   8.87   1.2        1.4        -0.8         -2.4
CHF          6.19       6.19   6.19    6.19   6.21   0.1        0.1         0.1          0.1

NOK         0.99        0.98   0.99    1.00   1.01    0.0       1.1        3.0             4.3
SEK         0.84        0.83   0.85    0.86   0.88   -1.6       2.2        3.9             6.2

CAD         5.73        5.82   5.87    5.84   5.85    1.7       3.0        2.8             3.6
AUD         5.91        5.87   5.93    5.96   6.02   -0.4       1.4        2.7             5.4
NZD         4.64        4.61   4.67    4.66   4.64   -0.2       1.6        2.1             3.3

PLN         1.75               1.77    1.77   1.77              0.1         1.2            3.4
CZK         0.29               0.30    0.30   0.31              0.9         1.6            3.3
HUF         0.26               0.25    0.25   0.25             -2.8        -1.6            0.9
RUB         0.18               0.20    0.20   0.20              7.5         7.9            8.8




                                                                  www.danskeresearch.com         23
Danske Markets FX forecasts vs. SEK
                                Forecast                Forecast vs forward outright, %
             Spot     +1m     +3m      +6m    +12m    +1m      +3m        +6m         +12m
Exchange rates vs SEK
EUR          8.84     9.00    8.70    8.60    8.50    1.6       -2.0        -3.5         -5.3
USD          6.96     7.26    7.02    6.83    6.54    4.2        0.5        -2.5         -7.1
JPY          8.79     9.18    8.88    8.11    7.52    4.4        0.6        -8.4        -15.8
GBP          10.93    11.25   10.88   10.49   10.12   2.8       -0.8        -4.5         -8.3
CHF          7.36     7.50    7.25    7.17    7.08    1.7       -2.1        -3.7         -5.9

NOK         1.17      1.19    1.16    1.16    1.15    1.6       -1.1        -0.8        -1.8
DKK         1.19      1.21    1.17    1.16    1.14    1.6       -2.2        -3.8        -6.0

CAD         6.82      7.05    6.88    6.76    6.67    3.3        0.8        -1.1        -2.5
AUD         7.04      7.11    6.95    6.89    6.87    1.2       -0.8        -1.1        -0.7
NZD         5.52      5.59    5.47    5.39    5.30    1.4       -0.6        -1.7        -2.7

PLN         2.09              2.07    2.05    2.02              -1.8        -2.3        -2.2
CZK         0.35              0.35    0.35    0.35              -1.1        -1.9        -2.4
HUF         0.30              0.29    0.29    0.29              -4.7        -5.0        -4.6
RUB         0.22              0.24    0.23    0.22               5.0         4.0         2.8




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Danske Markets FX forecasts vs. NOK
                                 Forecast              Forecast vs forward outright, %
             Spot       +1m    +3m      +6m   +12m   +1m      +3m        +6m         +12m
Exchange rates vs NOK
EUR          7.54       7.55   7.50    7.40   7.40   0.0       -0.9        -2.7        -3.6
USD          5.93       6.09   6.05    5.87   5.69   2.5        1.6        -1.7        -5.4
JPY          7.49       7.70   7.65    6.98   6.55   2.7
GBP          9.32       9.44   9.38    9.02   8.81   1.2        0.3        -3.8        -6.6
CHF          6.28       6.29   6.25    6.17   6.17   0.1       -1.0        -2.9        -4.2

SEK         0.85        0.84   0.86    0.86   0.87   -1.6       1.1         0.8         1.9
DKK         1.01        1.02   1.01    1.00   0.99    0.0      -1.1        -3.0        -4.2

CAD         5.81        5.91   5.93    5.81   5.81    1.7       1.9        -0.3        -0.7
AUD         6.00        5.97   5.99    5.93   5.98   -0.4       0.3        -0.3         1.1
NZD         4.71        4.69   4.72    4.64   4.61   -0.3       0.5        -0.9        -1.0

PLN         1.78               1.79    1.76   1.76             -0.8        -1.5        -0.4
CZK         0.30               0.30    0.30   0.30              0.0        -1.0        -0.7
HUF         0.26               0.25    0.25   0.25             -3.6        -4.2        -2.9
RUB         0.18               0.20    0.20   0.20              6.2         4.9         4.7




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