MARKET DRIVERS – CURRENCIES
FX Research • 16.07.2010 • Jyske Markets
Today’s Comment
Due to an increase in core consumer prices
in the US in May, the fears of low inflation or
downright deflation weakened slightly. The
consumer prices to be released today will
give further indication whether inflation is
on the rise or continues to stay at the very
low level. There are, however, indications
that we have seen the largest fall in core
inflation as to some degree the fall is linked
to the lower rental value of owner-occupied
housing, which is stabilising. Hence we
expect moderate inflation figures for June,
where falling petrol prices will lower
inflation. A surprise on the upside would
offer marginal support for the US dollar.
Yesterday, EUR/USD climbed further up to
129.50 and breached the 100-day moving
average. Since 1 July, EUR/USD has
increased from 1.22 to now above 1.29, and
that movement can be attributed to the mix
of rising money-market rates in the euro
zone (support for the euro) and
disappointing US economic indicators
(negative effect on the dollar). Thursday
offered another series of US indicators. Both
industrial production for June and jobless
claims for the week commencing on 5 July
turned out to be slightly better than
Publisher Editor:
Jyske Markets Helle Varming
FX & Interest Rate Research FX & Interest Rates
Vestergade 8-16 +45 89 89 71 05
DK-8600 Silkeborg hv@jyskebank.dk
expected. They were, however, Today’s Chart – EUR/USD
overshadowed by the two indicators, Philly
Fed and Empire Manufacturing, as they
disappointed strongly. Hence this week’s US
economic indicators have not managed to 1,40
do away with the financial markets’
concerns about slower US growth and hence 1,35
also speculations about a W-turn in global
growth. Therefore we see the current
correction of EUR/USD. Jyske Bank’s 1,30
Macroeconomic Research team is, however,
still of the opinion that we will not see a W- 1,25
turn. We maintain our assessment that for
the long-term EUR/USD will see a downward
trend, but a further upward correction for 1,20
EUR/USD in the short term cannot be ruled
out. The next important point of resistance 1,15
for the cross rate is 130.
29 jan 12 mar 23 apr 04 jun 16 jul
Today’s Key Events
• 11:00 Trade balance (EUR) Moving Average (100D ) Moving Average (200D )
• 14:30:00 Consumer prices (USD)
• 15:00 Capital inflow (TIC), USD
• 15:55 Michigan consumer confidence,
preliminary (USD) Source: Bloomberg/Jyske Bank
• 01:15:00 Speech by Fed’s Lacker (USD)
• 01:01 Sunday night - Housing prices from
Rightmove (GBP)
Read more:
Read more FX and interest rate analyses at www.jyskemarkets.com
Disclaimer:
Please see the last page
MARKET DRIVERS – CURRENCIES
FX Research • 16.07.2010 • Jyske Markets

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

target
Majors
EUR/USD 129.08 Focus on internal imbalances in the euro zone, political disagreement and pressure on Southern European govt. bonds sent down EUR - Resistance 130.00 next 131.00
The US is somewhat ahead of Europe in the economic cycle, and for some time economic indicators have shown good trends - Support: 124.80 next 124.00 123
The Fed’s quantitative easing keeps the USD value low; higher government debt does not result in increases in the US market rate as it should +
USDDKK 577.12 Focus on internal imbalances in the euro zone, political disagreement and pressure on Southern European govt. bonds sent down EUR + Resistance 596.96 next 600.81
The US is somewhat ahead of Europe in the economic cycle, and for some time economic indicators have shown good trends + Support: 573.08 next 568.71 606
The Fed’s quantitative easing keeps the USD value low; higher government debt does not result in increases in the US market rate as it should -
EURGBP 83.72 Focus on very negative public finances: Uncertainty about future fiscal tightening (and UK’s rating) may weaken pound sterling + Resistance 83.86 next 86.00
Pound sterling was under massive pressure when the financial crisis peaked, and (too) much misery has already been discounted - Support: 81.00 next 80.35 82.50
We expect that the quantitative easing came to an end in February and that the BoE will start normalising its monetary policy in H2 -
GBPDKK 889.60 Focus on very negative public finances: Uncertainty about future fiscal tightening (and UK’s rating) may weaken pound sterling - Resistance 919.77 next 927.21
Pound sterling was under massive pressure when the financial crisis peaked, and (too) much misery has already been discounted + Support: 888.40 next 866.29 903
We expect that the quantitative easing came to an end in February and that the BoE will start normalising its monetary policy in H2 +
EURJPY 112.54 Focus on debts in Southern Europe has caused pressure on the single European currency and shifted the balance of power between EUR and JPY - Resistance 113.00 next 114.40
Risk of renewed risk aversion supports JPY slightly - Support: 109.15 next 107.50 110
Decent growth in recent months; the economy is, however, still fragile; low growth ahead and deflation may once again be a theme +
JPYDKK 6.62 Focus on debts in Southern Europe has caused pressure on the single European currency and shifted the balance of power between EUR and JPY + Resistance 6.83 next 6.93
Risk of renewed risk aversion supports JPY slightly + Support: 6.59 next 6.51 6.77
Decent growth in recent months; the economy is, however, still fragile; low growth ahead and deflation may once again be a theme -

Please refer to the publication, CHF: stil moving upwards -

Please refer to the publication, CHF: stil moving upwards -

MARKET DRIVERS – CURRENCIES
FX Research • 16.07.2010 • Jyske Markets

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

target
Scandinavia
EURNOK 798.12 Continuing improvement of key indicators in Norway: labour market is strong and housing market is close to its record-high levels - Resistance 809 next 813
Norges Bank was one of the first ones to raise its interest rate. Even though we may be in for a slow start, we foresee 3% in the 1-year term - Support: 788 next 780 800
Correction in the equity market/rising risk aversion will still be able to put pressure on the NOK +
NOKDKK 93.31 Continuing improvement of key indicators in Norway: labour market is strong and housing market is close to its record-high levels + Resistance 94.54 next 95.51
Norges Bank was one of the first ones to raise its interest rate. Even though we may be in for a slow start, we foresee 3% in the 1-year term + Support: 92.09 next 91.64 93.10
Correction in the equity market/rising risk aversion will still be able to put pressure on the NOK -
EURSEK 943.01 Still risk that SEK will suffer a blow in the event of risk aversion - Resistance 965 next 980
Riksbanken expresses optimism about the economy and thinks Sweden has been through the worst part of the crisis + Support: 935 next 925 980
After GDP for Q2, Q3 and Q4 2009 has been revised up, an interest-rate hike in July is very likely +
SEKDKK 78.98 Still risk that SEK will suffer a blow in the event of risk aversion + Resistance 79.68 next 80.54
Riksbanken expresses optimism about the economy and thinks Sweden has been through the worst part of the crisis - Support: 77.20 next 76.02 76.00
After GDP for Q2, Q3 and Q4 2009 has been revised up, an interest-rate hike in July is very likely -
MARKET DRIVERS – CURRENCIES
FX Research • 16.07.2010 • Jyske Markets

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

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

Bemærk: We point out that FX investment is currently associated with extraordinarily high uncertainty. But
for long-term risk tolerant investors, there may be good investment opportunities in these turbulent times.
This recommendation is only relevant for very risk-tolerant clients with the right risk profile and the overall
financial strength to cope with any loss that may be incurred.
MARKET DRIVERS – CURRENCIES
FX Research • 16.07.2010 • Jyske Markets

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