MARKET DRIVERS CURRENCIES FX Research Jyske Markets

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1 Publisher: Jyske Markets FX Research Vestergade 816 DK8600 Silkeborg Analysts: Leander Dreyer Kristian Foged Schmidt Translation: Translation Services Read more: Read more research reports at Disclaimer: Please see the last page Open recommendations (01 month) Date Cross Case Entry Target Stop USDJPY BUY EUR/PL N SELL EURGBP BUY EURJPY BUY Change S/P for EUR/PLN to and T/P to Change S/L for EUR/JPY to Change S/L for EUR/GBP to The positive trends continue in the market. The development has supported our shortterm recommendations, which allowed for a correction. Yesterday we reached T/P for the EUR/USD recommendation. EUR/USD (from Buy to NEUTRAL): Our T/P at was reached yesterday; therefore our recommendation is NEUTRAL; the recommendation resulted in a return of 2.8%. We still see potential of a strengthening of EUR/USD towards the range of We await a better level for selling and will inform you when we assess the time has come to sell EUR/USD in anticipation of a new major movement. We emphasise that even if we recommended Buy for a short period of time, we still have a negative view of EUR/USD in the long term. From a technical point of view, EUR/USD must breach above before we see extraordinary momentum in the cross. EUR/GBP (BUY): We recommend to BUY EUR/GBP without T/P; instead we recommend to move S/L up. We have not yet seen a close above the 200day moving average (MA) at Such a close will be a clear signal of further downward potential. EUR/PLN (SELL): We recommend to SELL EUR/PLN; change T/P to and S/P to The incumbent prime minister won the election last Sunday, which is good news for PLN. If the positive trend continues in the financial markets, we easily see EUR/PLN being traded down to 420. EUR/JPY (BUY): We recommend BUY with T/P at No news from BoJ overnight does, however, strengthen JPY marginally. We recommend S/L at EUR/SEK (NEUTRAL): our recommendation is NEUTRAL. We consider a Buy recommendation somewhere in the range of EUR/NOK (NEUTRAL): our recommendation is NEUTRAL. We consider a Buy recommendation somewhere in the range of For today s important evens, please see the list of economic indicators Shortterm FX recommendations (01 month) Currency Spot Recommendation S/L EURUSD Neutral EURGBP BUY EURJPY BUY EURCHF Neutral EUR/NOK Neutral EUR/SEK Neutral EUR/PLN SELL USD/DKK Neutral GBP/DKK SELL 8.57 JPY/DKK SELL 7.28 CHF/DKK Neutral NOK/DKK Neutral SEK/DKK Neutral PLN/DKK BUY Chart of the day: 2year Greek yields Source: Bloomberg/Jyske Bank

2 Currency Spot Shortterm market drivers Technical levels Target 01 mth Major EURUSD Operation Twist is presumably one of the Fed s last tools. QE3 is the last one and will weaken USD. Resistance next Every third month, Greece is to receive a tranche payment. Requirements are to be met, which is difficult. High danger of Support: next infection. The trend has turned for EUR/USD from up to down. Range of not unlikely within the next 36 months. EURGBP Renewed turmoil relating to debt crisis will support USD, JPY and CHF. GBP has shortterm correlation with USD. Resistance next None UK economic indicators disappoint repeatedly. BoE thins inflation is falling. QE2is a drag on GBP. Support: next Technically EUR/GBP is in a deadlock between Trade in the range, and if we see a breach buy/sell in direction of the breach. EURJPY Cross has breached alltime low. Stops taken out. Opening towards 1.00 and then eases downward pressure. Resistance next Poor global growth indicators strengthen JPY relatively solidly. Longterm NZD and AUD positions are closed. Support: next The Japanese are talking and talking about the will to intervene. So far nothing has happened, but it may come suddenly. EURCHF So far the announced target at 120 holds firm. Rumour has it that hedge funds are ready to strike if Greece falls. Resistance next EU debt crisis; downgrade of the US; and Middle East crisis. This is all positive for CHF. Support: next A turn in macroeconomic indicators is important if the SNB's intervention is to be successful. EUR/NOK NOK only has soft safehaven characteristics (low debt, high interest s, etc.) but liquidity is too low and export share Resistance next high. NOK trades not far from strongest level for a decade. Low growth and falling oil price are bad news for NOK. Support: next Some increasing financial calm and slightly better indicators may quickly strengthen NOK. EUR/SEK The 200day moving average (200MA) has been breached with golden cross a very bullish signal Resistance next Recently SEK was affected by fears of slowdown in growth. If the trend of economic indicators is not turned, EUR/SEK will Support: next breach above 940. We expect range trading for many months to come. Investors should trade in the range of EUR/PLN Renewed focus on debt crisis typically affects PLN stronger than EUR (=EURPLN increases) Resistance next We reached 450 (that we had discussed). It became too much for Poland, which had intervened to strengthen PLN. Support: next Towards the end of 2011, Poland is to exchange several billions of EU funds in EUR to PLN Target 312 mth

3 Currency Spot Shortterm market drivers Technical levels Target 01 mth Major USD/DKK Operation Twist is presumably one of the Fed s last tools. QE3 is the last one and will weaken USD. Resistance next Every third month, Greece is to receive a tranche payment. Requirements are to be met, which is difficult. High danger of Support: next infection. The trend has turned for EUR/USD from up to down. Range of not unlikely within the next 36 months. GBP/DKK Renewed turmoil relating to debt crisis will support USD, JPY and CHF. GBP has shortterm correlation with USD. Resistance next None UK economic indicators disappoint repeatedly. BoE thins inflation is falling. QE2is a drag on GBP. Support: next ##### Technically EUR/GBP is in a deadlock between Trade in the range, and if we see a breach buy/sell in direction of the breach. JPY/DKK Cross has breached alltime low. Stops taken out. Opening towards 1.00 and then eases downward pressure. Resistance next Poor global growth indicators strengthen JPY relatively solidly. Longterm NZD and AUD positions are closed. Support: next The Japanese are talking and talking about the will to intervene. So far nothing has happened, but it may come suddenly. CHF/DKK So far the announced target at 120 holds firm. Rumour has it that hedge funds are ready to strike if Greece falls. Resistance next ##### EU debt crisis; downgrade of the US; and Middle East crisis. This is all positive for CHF. Support: next A turn in macroeconomic indicators is important if the SNB's intervention is to be successful. NOK/DKK NOK only has soft safehaven characteristics (low debt, high interest s, etc.) but liquidity is too low and export share Resistance next high. NOK trades not far from strongest level for a decade. Low growth and falling oil price are bad news for NOK. Support: next Some increasing financial calm and slightly better indicators may quickly strengthen NOK. SEK/DKK The 200day moving average (200MA) has been breached with golden cross a very bullish signal Resistance next Recently SEK was affected by fears of slowdown in growth. If the trend of economic indicators is not turned, EUR/SEK will Support: next breach above 940. We expect range trading for many months to come. Investors should trade in the range of PLN/DKK Renewed focus on debt crisis typically affects PLN stronger than EUR (=EURPLN increases) Resistance next We reached 450 (that we had discussed). It became too much for Poland, which had intervened to strengthen PLN. Support: next ##### Towards the end of 2011, Poland is to exchange several billions of EU funds in EUR to PLN Target 312 mth

4 MARKET DRIVERS CURRENCIES Open recommendations (01 mth.) Date Cross Case Entry Target Stop USDJPY BUY EUR/PLN SELL EURGBP BUY EURJPY BUY Historical return in Market Drivers 2011 Total return: 36.17% Average duration, days: Reporting on return is based on the daily Market Drivers and the daily currency updates (available at Past returns and performance cannot be seen as a reliable indication of future returns and performance.

5 MARKET DRIVERS CURRENCIES Current investment cases (112 months) Currency Stgy Horizon Date Entry Target Stop Read more USDJPY buy 1 month ,72 79,5 75,9 Disclaimer & Disclosure Jyske Bank is supervised by the Danish Financial Supervisory Authority. The research report is based on information which Jyske Bank finds reliable, but Jyske Bank does not assume any responsibility for the correctness of the material nor any liability for transactions made on the basis of the information or the estimates of the report. The estimates and recommendations of the research report may be changed without notice. The report is for the personal use of Jyske Bank's customers and may not be copied. This is a recommendation and not an investment report. sell Conflicts of interest Jyske Bank has prepared procedures to prevent conflicts of interest. These procedures have been incorpod in the business procedures covering the research activities of Jyske Markets, a business unit of Jyske Bank. Jyske Bank's FX, money market and commodity analysts may not hold positions in the instruments for which they prepare research reports, but Jyske Bank is permitted to hold positions and/or have interests in the instruments for which such reports are prepared. The analysts receive no payment from persons interested in individual research reports. Read more about Jyske Bank's policy on conflicts of interest at Risk FX, money market and/or commodity investment involves risk. Movements in the credit market, the sector and/or the news flow, etc. regarding the issuer may affect the exchange /the interest /the price of the commodity. See the front page of the research report for our view of the risk associated with the currency/interest /commodity investment. The risk factors and/or the sensitivity calculations stated in the report should not be regarded as exhaustive. Update of the research report Analyses, recommendations, and ad hoc publications are not updated. A new publication will instead be published if and when it is found necessary. Market comments are updated daily. See the front page for the initial date of publication of the report. All prices stated are the latest trading prices at the time of the release of the research report, unless otherwise stated.