jyske bank jul 26 fx spot on

8/9/2019 Jyske Bank Jul 26 Fx Spot On

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FX SPOT ONFX Research 26 July 2010 Jyske Markets

Publisher: Jyske MarketsVestergade 8-16DK - 8600 Silkeborg

Analysts:Helle Varming +45 89 89 71 [email protected]

Linda Vestergrd+45 89 89 76 [email protected]

Kent Bk Iversen+45 89 89 76 [email protected]

Translation:Translation Services

Read more researchreports about foreignexchange atwww.jyskemarkets.com

Disclaimer:Please see the last page

Overall expectationsThe markets seem to be getting into thesummer mood; volumes are lower, and thepanic relating to the debt crisis in the eurozone has abated considerably in June and July.However, the debt-ridden countries inSouthern Europe still have to prove that theyare able to implement the promised budgetcuts, and that process will take time. Thereforewe do not expect that the theme hasdisappeared for good, and we think there isstill a risk of nervousness in this respect overthe coming months. However, continuousindications that the consolidation in thefinancial markets proceeds according to planwill reduce the uncertainty.Following a period where focus has solely (orpractically so) been on the problems in Europe,the markets are now looking to the rest of theworld. The disappointing Chinese as well as USeconomic indicators have caused marketplayers to question whether, actually, theupswing in the global economy is all thatsustainable in the somewhat longer term orwhether we will be in for yet another economicdownturn. And indeed, following the mostrecent interest-rate meeting of the US centralbank, the Fed, the monetary-policy committeeemphasised that the risk on downside has

increased, and it also stated that it willintroduce further monetary easing if theeconomic indicators continue to deteriorate.

Generally, Jyske Banks macro -economists stillexpect a broken V recovery and believetherefore that the recovery will last. However,there is not much doubt that the economicindicators are now again attracting attentionafter a period where the overriding theme inthe markets was the Southern European debtcrisis. If the economic indicators continue todisappoint, the nervousness of a W-turn in theglobal economy may intensify, but for the timebeing we assume that we are merely in aphase in the upswing where growth is slowingdown a bit without the economy sliding intoanother recession.

Risk scenariosIf the current weakening of the US economicindicators continues and turns into a more

serious setback for the economy, there is of course also the risk that this will affect theglobal economy in general. We assess,however, that the greatest risk to globalgrowth still lies in a flare-up of the financialcrisis in the wake of the Greek crisis. Thismight be sparked if one or more of theSouthern European countries were to defaultor to apply for debt restructure. This wouldaffect the European banks severely, becausethey have large holdings of government bondsissued by the Southern European countries.

- We hope you will enjoy reading FX - SPOT ON -

An overview An overview Overall expectations and risk scenarios

FX outlook yske Bank's FX forecasts

The past month in review The development in the markets over the past month

FX overviewUSD, GBP, CHF, JPY, NOK, SEK, CZK, PLN, HUF, TRY, MXN, BRL, ZAR and CNY

FX forecasts including consensus estimatesHow do Jyske banks forecasts deviate from consensus?

Economic forecasts yske Banks forecast for other assets traded

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Pages 5-21

Pages 22-23

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Majors & skandisCentral bank

rateAgainst

EUR USD DKK GBP*

EUR

Spot 1.00% - 1.29 7.45 1.193M 1.00% - 1.23 7.45 1.206M 1.00% - 1.27 7.45 1.22

12M 1.25% - 1.33 7.45 1.25

USD

Spot 0-0.25% 1.29 - 5.79 1.533M 0-0.25% 1.23 - 6.06 1.48

6M 0-0.25% 1.27 - 5.87 1.5512M 0.75% 1.33 - 5.60 1.66

GBP

Spot 0.50% 0.84 1.53 8.86 -3M 0.50% 0.83 1.48 8.98 -

6M 0.50% 0.82 1.55 9.09 -

12M 1.00% 0.80 1.66 9.31 -

JPY

Spot 0.10% 111.97 86.96 6.66 133.133M 0.10% 110 89.43 6.77 132.536M 0.10% 115 90.55 6.48 140.24

12M 0.10% 120 90.23 6.21 150.00

CHF

Spot 0-0.75% 1.3443 1.04 5.54 1.603M 0-0.75%

Please see our research report, CHF: stil moving upwards 6M 0-0.75%12M 0-1.00%

NOK

Spot 2.00% 7.95 6.18 0.94 9.453M 2.00% 8.00 6.50 0.93 9.646M 2.25% 7.95 6.26 0.94 9.70

12M 2.50% 7.90 5.94 0.94 9.88

SEK

Spot 0.50% 9.41 7.31 0.79 11.193M 0.75% 9.50 7.72 0.78 11.45

6M 1.25% 9.40 7.40 0.79 11.4612M 1.50% 9.35 7.03 0.80 11.69

DKK

Spot 1.05% 7.45 5.79 - 8.863M 1.05% 7.45 6.06 - 8.98

6M 1.05% 7.45 5.87 - 9.0912M 1.15% 7.45 5.60 - 9.31

Note: All the cross rates are quoted in accordance with inter-bank conventions except for those in the columnmarked with an asterisk (*); these cross rates have GBP as their base currencySource: Bloomberg/Jyske Bank

Jyske Bank's FX forecasts

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Emerging Markets

Central bankrate

Against

EUR USD DKK GBP*

CZK

Spot 0.75% 25.18 19.54 0.30 29.933M 0.75% 25.60 20.81 0.29 30.84

6M 0.75% 25.50 20.08 0.29 31.10

12M 1.00% 25.50 19.17 0.29 31.88

PLN

Spot 3.50% 4.09 3.17 1.82 4.863M 3.50% 3.95 3.21 1.89 4.76

6M 3.50% 3.90 3.07 1.91 4.76

12M 3.75% 3.80 2.86 1.96 4.75

HUF

Spot 5.25% 285.68 221.74 0.26 339.523M 5.25% 280 228 0.27 337.35

6M 5.25% 270 213 0.28 329.27

12M 5.25% 270 203 0.28 337.50

TRY

Spot 7.00% 1.96 1.52 3.80 2.333M 7.00% 1.91 1.55 3.91 2.30

6M 7.00% 1.91 1.50 3.91 2.32

12M 8.50% 1.93 1.45 3.86 2.41

MXN

Spot 4.50% 16.43 12.75 0.45 19.523M 4.50% 15.68 12.75 0.48 18.89

6M 4.50% 15.88 12.50 0.47 19.36

12M 4.50% 15.63 11.75 0.48 19.53

BRL

Spot 10.75% 2.27 1.76 3.29 2.693M 11.25% 2.25 1.83 3.31 2.71

6M 11.75% 2.29 1.80 3.26 2.79

12M 12.50% 2.26 1.70 3.30 2.83

ZAR

Spot 6.50% 9.60 7.45 0.78 11.413M 6.50% 9.53 7.75 0.78 11.5

6M 6.50% 9.53 7.50 0.78 11.6

12M 6.50% 9.64 7.25 0.77 12.1

CNY

Spot 5.31% 8.73 6.78 0.85 10.383M 5.31% 8.24 6.70 0.90 9.93

6M 5.31% 8.38 6.60 0.89 10.22

12M 5.85% 8.58 6.45 0.87 10.72

Note: All cross rates are quoted in accordance with inter-bank conventions except for those in the columnmarked with an asterisk (*); these cross rates have GBP as their base currency.Note: The forecasts for TRY, MXN, BRL, ZAR and CNY are against USD.Source: Bloomberg/Jyske Bank

Jyske Bank's FX forecasts - continued

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By Helle Varming

Dollar depreciation due to shift in focusIn July focus shifted a bit from the debt crisis inSouthern Europe to general concerns about a newdownturn for the global economy. Due todisappointing economic indicators from China andthe US, there was uncertainty about future growthas labour-market figures, production indicatorsand retail sales figures showed trends that causedconcerns. Moreover, after its interest-rate meetingin June, the Fed expressed concerns and indicatedthat further monetary easing may be in the offing if the indicators continue to weaken. The shift in

focus supported EUR/USD as compared to thetrend in June when EUR was under pressure due tothe rather unambiguous focus on the unrest inSouthern Europe. Moreover, rising money-marketrates due to the stricter liquidity policy on the partof the ECB has supported EUR, which so far hasappreciated by 4% against USD in July.

Pound sterling could not follow the euroAs stated, the euro strengthened decently in July,but pound sterling was not able to follow the highpace. In June, pound sterling saw a bit of support

after it was revealed that a member of themonetary-policy committee (Andrew Sentance)had voted in favour of an interest-rate hike at theinterest-rate meeting early in the month.However, after the interest-rate meeting in July, itwas clear that Sentance is still the only one whowishes to raise the rate, and there was no moresupport in this respect. Hence, it is primarily theprospects of massive public savings anduncertainty about the impact on the real economythat set the agenda, and that also put slightpressure on pound sterling. Hence EUR/GBP

increased from 81.90 to 84.15 in July.

Japanese yen still at the mercy of marketsentimentThe yen saw a somewhat mixed development overthe month, and it still seems to trade on the backof the general market sentiment. For instance, themarkets did not react particularly strongly to theupper-house elections in Japan earlier in themonth; the government suffered a severe blow andlost its majority. Even though it was not fatal tothe government to lose its majority in the upper

house, it will now become much more difficult topass new legislation, and all other things beingequal, the higher political uncertainty should havea negative effect on the currency. So far the yen

has only fallen by about 1.5% against the euro overthe past month.

The Swiss franc in a spot of troubleThe Swiss franc got off to a weak start in Julybecause, for instance, weak inflation figures andnervousness about the effects of the strongexchange rage added to speculations that despite previous statements the SNB wouldagain intervene in the FX markets if the Swiss francappreciated at the pace that was seen in June. Sofar, the SNB is, however, staying on the sidelines,and now before the end of the month EUR/CHF isbeginning to fall again. It does not, however, seem

that the Swiss franc will manage to maintain itsdepreciation of about 1% against the euro in July.

Changing tracks in ScandinaviaIn Scandinavia the Norwegian krone has had a bitof a turbulent month due to the quiet markets overthe summer, and the lower volume in the marketspaves the way for wider fluctuations. For quitesome time, the Norwegian central bank, NorgesBank, has differed from other central banks as ithas already raised its deposit rate several timesover the past year, and this has for quite some

time offered support to the Norwegian currency. In July, however, the Swedish central bank,Riksbanken, followed the example of the centralbanks that have initiated tightening measures andtherefore investors have to some extent switchedfrom the Norwegian krone to the Swedish krona.Hence this month, the Swedish krona hasappreciated by almost 1.5% against the Norwegiankrone and by 0.7% against the euro. On the otherhand, the Norwegian krone weakened a bit, by0.7%, against the single European currency.

Chart 1: selected currencies (1 June2010 = 100)

CHF/DKKGBP/DKK

JPY/DKKNOK/DKK

SEK/DKKUSD/DKK

Kilde: Reuters EcoWin

2 6 8 12 14 16 20

I n d e

k s

96

97

98

99

100

101

102

103

The month in review

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By Helle Varming

US dollar - USDThe worst panic surrounding the European debtcrisis has abated somewhat over recent weeks,and market participants have been pleasantlysurprised at the ability of the Mediterraneancountries to obtain funding by auctioning gov-ernment bonds.This helped to buoy up the euro, and the IMMpositions show many indications that specula-tive investors have already closed a good deal of the short EUR positions accumulated during thespring. In our view, this indicates that the po-tential for additional appreciation of the EURagainst the US dollar from current levels isprobably limited, and in general we also find ittoo early to sound the all-clear with regard tothe European debt crisis. In our view, there willstill be a risk of renewed political turmoil afterthe summer holidays, so we also maintain anegative bias for the EUR/USD rate at threemonths term although we have raised ourtarget to 1.23 in the light of the significant euroappreciation seen over recent weeks. For thelonger term we believe that the euro will regainsome of what it has lost in step with the reduc-tion of political risk and the narrowing of themassive risk premium which has weighed on theeuro for the first half of 2010. Moreover, weexpect USD to depreciate when focus homes inon the fiscal-policy tightening measures and thepublic debt burden of the US possibly alreadyup to the mid-term elections in the US in early

November. Particularly towards the end of ourestimate period will pressure against the dollarintensify when the growth differences across theAtlantic lessen.

Estimate - EUR/USD:3M: 1.236M: 1.2712M: 1.33

Pound Sterling - GBPThe predominant issues with regard to sterlingare still the huge public-sector deficits and thegrowing debt burden. The most important taskfor David Camerons new government has ther e-

fore been to get the public finances back to asustainable level. The long-awaited austeritybudget announced on 22 June was welcomed bythe financial markets and helped to supportsterling. The UK will have its work cut out, andthe coming years will show whether the eco-nomic cure in combination with global growthsuffice to save the economy in the long term.Moreover, we do not yet know whether the fiscaltightening and its dampening effect on eco-nomic activity will affect the Bank of Englands(BoEs) monetary policy. It was slightly surpris-

ing when Mr Andrew Sentance who is a memberof the monetary-policy committee, voted in fa-vour of an interest-rate hike at the monetary-policy meeting in June. The reason why Mr Sen-tance voted for higher interest rates was, amongother things, concern that rising inflation mightbe ensconced for a long period. However, weexpect that inflation will slow down, and thatthis fact in addition to the sharp fiscal-policytightenings will enable the BoE to adopt a wait-ing stance. Therefore, we still assess that the

BoE will keep interest rates at the record low of 0.5% until February 2011. We still expect ster-ling to head higher in line with the slow declineof the risk premium which has weighed on GBPsince the financial crisis peaked. Yet we still findthat uncertainty about future developmentsindicates that developments will be gradual, andthat there may be a few bumps on the road.

Estimate - EUR/GBP:3M: 0.836M: 0.82

12M: 0.80

Swiss franc - CHFThe Swiss consumer price index surprised on thedownside in June when inflation fell to 0.5% y/yfrom 1.1%. An annual growth rate of 1% had beenexpected, and hence inflation turned out to besomewhat lower than expected. The Swiss Na-tional Bank (SNB) toned down concern aboutdeflation considerably in connection with themonetary-policy meeting held on 17 June, inti-

mating that the SNB has abandoned its interven-tion policy, so that the franc can float morefreely. However, the rising inflation rate and

In short

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concern that the strength of the currency will hitexports has caused market participants tospeculate in that the SNB will draw a line in thesand at some time despite its announcement at

the interest-rate meeting. The SNBs currencyreserves have fallen steadily since the monetary-policy meeting in June, and indeed there havebeen no indications that the SNB has resumedits intervention policy. Still, the franc has weak-ened somewhat against the euro, which hasperformed well for the past weeks, and technicalanalysis indicates that there may be scope foradditional weakening of the franc towards136.50 against the euro. In this connection, wefind it important to stress that for the long term

we are still of the opinion that the fundamentals(and it cannot be ruled out that the SNB mayraise interest rates before the ECB begins a se-ries of cuts) continue to point to appreciation of the franc, and that the uptrend of the franc re-mains intact. Therefore we still think that inves-tors should close down CHF funding at correc-tions of the uptrend .

Read more about our view on CHF in the publica-tion CHF: Still moving upwards

Japanese yen - JPYThe combination of a weakening euro and grow-ing risk aversion in the markets has boosted theyen for months. In recent weeks fears about aeuro-zone collapse have abated somewhat, andthe VIX index (which indicates the general riskaversion in the markets) has been falling. Anxi-ety is still not far away, and the more optimisticundertone we have seen in the markets latelystill appears fragile. So far, we maintain ourestimate of the 3M EUR/JPY rate at 110. Still, in

our view the anxiety that has characterised themarkets for the past months is merely a correc-tion. Accordingly, we expect anxiety to decreasefurther. All other things being equal, this willmean that pressure against the yen will grow asinvestor appetite for risky assets increases.Another thing in favour of a yen weakening inthe longer term is the deflation spectre whichacts as a heavy damper on the Japanese econ-omy. Although the economic growth rate hasbeen fairly high for some quarters, Japan has

again had to struggle with the deflation spectre,and in our view this means that there are no

prospects of interest-rate hikes in Japan untilsome time in 2012.Economies elsewhere in the world are still show-ing signs of progress, and even if there are no

interest-rate hikes in the pipeline, for instance inthe US, the Fed is on present showing likely tobegin to tighten its monetary policy in early2011. The prospect of a wider yield spread to theUS, among other countries, will add to the pres-sure against the yen particularly towards theend of our estimate period. Last but not least,Prime Minister Kan's government lost its major-ity in the upper house at the election at mid-July.Even if the defeat at the election was not fatal,the government came out weaker, and the deci-

sion process leading to, e.g., economic reformintended to force the public finances into bal-ance have become considerably more difficult.All other things being equal, this will also de-press the yen.

Estimate - EUR/JPY:3M: 1106M: 11512M: 120

Norwegian krone - NOKIncreased anxiety among investors occasionedby the debt crisis in the euro zone has abun-dantly demonstrated that the krone is probablystill sensitive to higher risk aversion in the mar-kets. Overall, the krone is still supported to someextent by healthy fundamentals and in particularby the gradual tightening by Norges Bank of itsmonetary policy. On earlier occasions, we haveargued that the potential of the krone wouldprobably be relatively little among other thingsbecause the exchange rate is by now nearly back

at pre-crisis levels, and because focus on thekrone is likely to weaken when the worlds othercentral banks begin to raise interest rates.Moreover, the economic indicators were some-what disappointing at the beginning of 2010,and Norges Bank in its latest monetary-policyreport envisaged only a single interest-rate hikein the second half of 2010. This supports ourexpectation expressed earlier that the potentialof the krone will be smaller this year than it wasin 2009.

Overall, we still expect the krone to be stable toslightly stronger during our estimate period, but

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if anxiety in the financial markets intensifies, thecurrency may again suffer a blow.

Estimate - EUR/NOK:

3M: 8.00 6M: 7.95 12M: 7.90

Swedish krona - SEKThe krona still shows signs of weakness whensentiment in the markets is depressed. GDPgrowth proved very high at the beginning of thisyear, and the economic growth rates for Q2-Q42009 were subject to significant upward revi-sions. It also meant that the Riksbank raisedinterest rates for the first time at the monetary-policy meeting in July, and although many un-certain points remain about the Swedish econ-omy (among other things, the ongoing debtcrisis in the euro zone and, notably, the pros-pects of global growth), we expect the Riksbankto tighten its monetary policy gradually to a reporate of 1.75% at one year's term.

All things considered, the Swedish economy hasprogressed well, and now that anxiety in themarkets seems to have abated somewhat, muchindicates that the value of the krona will con-

tinue to edge up. But the EUR/SEK rate is almostback to its old trading range from before theoutbreak of the financial crisis, and we thereforedo not expect the krona to strengthen signifi-cantly. Panic about the debt crisis in the eurozone has, however abated somewhat, and evenif there is a risk particularly over the comingmonths that anxiety will flare up again and putpressure on the krona, we expect the currency tocontinue to find a certain amount of support inthe prospects of interest-rate hikes on the part

of the Riksbank. Estimate - EUR/SEK:3M: 9.506M: 9.4012M: 9.35

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By Helle Varming Country facts GDP and inflation (y/y)

Per capita GDP (USD, 2008) 47,393

GDP growth (Q1 2010 (q/q)) 0.7%

Inflation (March 2010 (y/y)) 1.1%

Unemployment 9.5%

Central-bank rate 0-0.25%

Current account (% of GDP (2008)) -4.9%

Public debt (% of GDP (2008)) 70.4%

The worlds largest economy and one of the worlds highest GDP per capita. The largest trading partners are (%of exports): Canada (20.1%), Mexico (11.7%) and China (5.5%). The large industries in the US include oil, steel,auto and air transport. US GDP per sector: Service (79.6%), Manufacturing industry (19.2%), Agriculture (1.2%).

EUR/USD incl. forecast and forward rates Current account (C/A)

Fundamental valuation Investment case Based on the purchasing power parity, USD is slightly

undervalued equilibrium around 1.20 (EUR/USD)and 6.20 (USD/DKK).

We expect US growth to be markedly higher thaneurozone growth (at least twice as high) in both 2010and 2011.

Interest-rate hike from the Fed in March 2011. ECBwill wait until June 2011.

The debt crisis in the euro zone and the need forfiscal-policy tightening may have an adverse effect on growth in the euro zone.

The debt crisis in Southern Europe and uncertaintyabout its consequences for growth have flagged off,but the danger is not over yet.

Risk of political turmoil after the summer holidays. Relatively better prospects for the US economy will

support USD. The yield spread will narrow in favour of USD over the

coming quarters. USD is still in a technical uptrend.

Price triggers Risk factors Improvement of economic indicators from the US

(relative to the euro zone). Narrowing of credit spread between Europe and the

US at the short end of the yield curve (up to 2Y) willsupport USD.

Negative surprises in the euro zone, e.g. in the formof failed government bond auctions.

The Fed is setting the scene for a normalisation of themonetary policy (e.g. by removing the promise tokeep interest rates low and withdrawing quantitative

For the short term: risk of USD weakening if USeconomic indicators continue to disappoint.

Continued decreasing concern about the situation inSouthern Europe may support EUR.

Need for fiscal-policy tightening in the US may delaythe first interest-rate hike.

New monetary-policy easing may put USD underrenewed pressure.

Doubt about the status of USD as a reserve currencymay enhance the pressure on USD.

US dollar - USD

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By Helle Varming

Country facts GDP and inflation (y/y)


GDP growth (Q1 2010 (q/q)) 0.3%

Inflation (May 2010 (y/y)) 3.2%

Unemployment 7.8%

Central-bank rate 0.5%



The UK has one of the largest economies in Western Europe and is Europe financial centre. The largest tradingpartners are (% of exports): The US (13.1%), Germany (11.5%), The Netherlands (7.8%). Banking and insuranceservices make up the largest part of GDP: Service (80.4%), Manufacturing industry (18.2%), Agriculture (1.4%).

EUR/GBP incl. forecast and forward rates Current account (C/A)

Fundamental valuation Investment case GBP is undervalued based on the purchasing power

parity equilibrium is approx. 0.7360 (EUR/GBP)and 10.13 (GBP/DKK).

The upturn in the UK is still weak and massivesavings of public budgets will over the comingyears slow down growth further.

Inflation and inflation anticipations are, however,rising and this leaves BoE in a dilemma.

We expect a stable to slightly stronger GBP overthe coming months. The greatest potential in GBPis some months ahead.

The end to quantitative easing and an interest-rate hike from the BoE in February 2011 (ECB willwait until June 2011) will support pound sterling.

A gradual improvement of the economy andclarification about the new governments fiscalline will reduce uncertainty related to sterling andthe risk premium in the long term.

Price triggers Risk factors A widening of the yield spread to the euro zone (2Y

and 10Y) will support sterling. Economic indicators improve and the upturn gains

momentum. An end to the quantitative easing which keeps

market rates artificially down. Inflation will be more sustainable and hikes will be

made sooner than expected.

The UK falls back into recession and interest ratesremain low for a longer period than expected.

An escalation of the financial crisis may result in ahigh risk premium on GBP due to the exposure tothe financial sector in London.

Renewed uncertainty about the sustainability of the UK economy may raise doubt whether the UKwill be able to maintain its current credit rating.

The euro-zone countries succeeded in putting adamper on the worse uncertainty and EUR is lifted.

Pound Sterling - GBP

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By Helle Varming



GDP growth (Q1 2010 (q/q)) 0.4%

Inflation (June 2010 (y/y)) 0.5%

Unemployment 3.7%

Central-bank rate 0-0.75%

Current account (% of GDP (2008)) 2.4%


Switzerland has a wealthy and stable economy with GDP per capita among the highest in the world. The largesttrading partners (% of exports): Germany (33.3%), Italy (11%), France (9.4%). Important industries: machines,watches, bank and insurance. GDP per sector: Service (73%), Manufacturing industry (23%), Agriculture (4%).

Risk of further CHF appreciation Our scenario of an upward shift to a new level in the Swiss franc is still relevant (see

the research report Risk of CHF appreciating further from 20 May). At the June meeting, the Swiss National Bank (SNB) did maintain its rate, but its

subsequent comment did not contain the by now so well-known remark that it would'prevent any excess strengthening of the Swiss franc'.

Instead the SNB said that it would intervene if the appreciation becomes a problemagain in respect of renewed risk of deflation.

The SNB stated also that the threat of deflation has generally been eliminated. This indicates that at this point in time, the SNB is not overly concerned that an

appreciation of the franc will have serious consequences for the economy, and withthese signals there is every indication that the franc will appreciate further.

The debt crisis in Southern Europe has so far prompted the SNB to leave interest ratesunchanged but seen in isolation developments in the domestic economy indicate that ahike may soon be appropriate. When the SNB indicates a tightening of its monetarypolicy, it will be another supportive factor for the currency.

Fundamentally, there are many indications of a stronger franc for the period ahead.

Technically, EUR/CHF is in a downtrend with resistance at the moment around 140 andfor the short term around 136-136.50.

It appears increasingly likely that we will see a test of 134.80 in EUR/CHF. There are thus still many indications of a shift to a new level for the Swiss franc where

the new, strong level is maintained for both the short and long term. Investors should therefore use corrections towards 140 in EUR/CHF to close Swiss

franc funding. The new major range in EUR/CHF is now 122-140.

Swiss franc CHF

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By Helle Varming

Country facts GDP and inflation (y/y)Per capita GDP (USD, 2008) 38,271

GDP growth (Q1 2010 (q/q)) -2.3%

Inflation (May 2010 (y/y)) -0,9%

Unemployment 5.2%




In terms of GDP (PPP), Japan is the worlds third largest economy next to the US and China. The largest tradingpartners (% of exports): The US (17.8%), China (16%), South Korea (7.6%). Japan produces: motorcycles, electronics,ships and chemicals. GDP per sector: Service (66.4%), Manufacturing industry (27.9%), Agriculture (4.4%).

EUR/JPY incl. forecast and forward rates Current account (C/A)

Fundamental valuation Investment case Based on purchasing power parity, JPY is overvalued

equilibrium around 1.47 (EUR/JPY) and 5.07(JPY/DKK).

Growth declines e.g. the effect from the fiscal-policy easing fades away.

A number of factors puts a damper on growth,including the need to consolidate the public finances,which are in a sorry state.

Deflation is again a reality in Japan, and in our view thismeans that interest-rate hikes will not be on the agendauntil 2012 at the earliest.

We expect a yen weakening for the long term. Japan may look forward to a battle against deflation

until end-2011. The BoJ will not tighten its monetarypolicy until 2012 at the earliest.

We expect, however, that the other G10 centralbanks will start tightening their monetary policy

early next year (BoE in February and Fed in March2011).

A widening of the yield spreads will squeeze the yen.

Price triggers Risk factors Increased appetite for risky assets. A widening of the yield spread between Japan and the

other G10 nations gives renewed focus on the yen asa funding currency.

Renewed focus on the possibility of intervention mayput pressure on the yen.

The BoJ will increase the purchase of governmentbonds (extend the quantitative easing).

Focus on the development in public debt (close to200% of GDP) creates distrust in JPY.

Renewed outbreak of risk aversion due e.g. to thedebt crisis in the euro zone

The global crisis is slow in progress and thenormalisation of the interest-rate levels in the otherG10 countries is long in coming.

Technical breach of 108 for EUR/JPY may pave theway for further strengthening of JPY down towards100.

apanese yen - JPY

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By Helle Varming



GDP growth (Q1 2010 (q/q)) 0.1%


Unemployment 3.7%




Norway has a solid and wealthy economy and one of the worlds highest per capita GDP. The largest tradingpartners are (% of exports): The UK (27%), Germany (12.8%), The Netherlands (10.4%). Main industries: oil, gas,shipbuilding and chemicals. GDP per sector: Service (76%), Manufacturing industry (21.1%), Agriculture (2.9%).

EUR/NOK incl. forecast and forward rates Current account (C/A)

Fundamental valuation Investment case NOK is slightly undervalued with respect to

purchasing power parity equilibrium 7.80(EUR/NOK) and 95.4 (NOK/DKK).

The upswing in Norway has begun. Norges Bank has begun the normalisation of the

interest-rate level and has already hiked three

times by a total of 75 bp to 2% since October. We expect growth of 1.9% and 2.6% in 2010 and

2011, respectively, and we expect further hikestotalling 100 bp to 3% at 12-months' term.

The krone has already strengthened somewhatover the past twelve months.

We believe in a stable to weak positivedevelopment in NOK over the coming year, asNorges Bank will raise interest rates further, whilethe majority of the other G10 central banks will

remain reluctant. NOK has already strengthened by 15% in 2009,and we therefore assess that the potential will bemore limited in 2010 (2-3% over the year).

Price triggers Risk factors Increased appetite for risky assets will support

NOK. Further widening of the yield spread between

Norway and the other G10 nations supports NOKsince the prospect of a positive return supportsthe demand for NOK.

Any rises in the oil price may support NOK.

The NOK strengthening may prompt Norges Bankto postpone the hikes to help the weakmanufacturing industry to get back on track.

Growth has disappointed in early 2010 and if thistrends continue it may have consequences forNorges Banks future interest-rate path.

A possible deterioration of the sentiment in thefinancial markets may put pressure on NOK.

Norwegian krone - NOK

12/27


13/27


By Helle Varming



GDP growth (Q1 2010 (q/q)) 1.4%


Unemployment 8.8%




The Swedish economy has been hit hard by the global crisis but is slowly recovering. The largest trading partners are(% of exports): Germany (10.4%), Norway (9.5%) Denmark (7.4%). Iron, steel, defence equipment and automotive arethe largest industries. GDP per sector: Service (70.5%), Manufacturing industry (28%), Agriculture (1.6%).

EUR/SEK incl. forecast and forward rates Current account (C/A)

Fundamental valuation Investment case SEK is undervalued based on purchasing power parity

equilibrium 7.60 (EUR/SEK). The upswing will begin in 2010 after the deep recession. Consumers are still optimistic and the industry and the

export are now also improving. We expect growth in Sweden of 3 .2% and 2.4% in 2010

and 2011, respectively (we believe euro zone growthwill be 1-1.5% for the same period).

We expect the Riksbanken to begin to raise interestrates in July 2010 (ECB waits until mid-2011).

Riksbanken has indicated that interest rates will behiked during the summer or early autumn.

The strong growth in early 2010 indicates aninterest-rate hike in July.

We expect that the difference in growth betweenSweden and the euro zone will be in favour of

Sweden. The yield spread (2-year swap spread) to the eurozone will develop in favour of Sweden over thecoming quarters, and this will support the SEK.

Price triggers Risk factors Increased appetite for risky assets will support SEK. Signals from the Riksbanken of a further tightening of

the monetary policy and an early normalisation of the interest-rate level.

Positive surprises with respect to economicindicators both globally and locally (includingcontinuing improvements in exports).

An outbreak of risk aversion in the financial markets(e.g. based on a government-debt crisis).

The global upturn loses momentum, and the Swedisheconomy is put under renewed pressure.

Market rates reflect expected hikes of up to 75 bp inH2. Risk of disappointments if the crisis in the eurozone escalates.

Swedish krona - SEK

13/27


14/27


By Linda Vestergaard Country facts GDP and inflation (y/y)


GDP growth (Q4 2009 (q/q)) 0.5%


Unemployment (May 2010) 8.5%




Compared with the other former communist states, the Czech Republic is the most stable and wealthy economy. Thelargest trading partners are (% of exports): Germany (30.3%), Slovakia (6.6%), Russia (6.2%). Primary industry: auto,metal and machinery. GDP per sector: Service (56.2%), Manufacturing industry (37.6%), Agriculture (2.3%).

EUR/CZK incl. forecast and forward rates Current account (C/A)

Current Account Current Account % GDPSource: Reuters EcoWin

96 98 00 02 04 06 08

% G D P

-8

-7

-6

-5

-4

-3

-2

-1

0

1

2

3

B i l l i o n C Z K

-45

-40

-35

-30

-25

-20

-15

-10

-5

Fundamental valuation Investment case The Czech Republic was also hit by the global

economic slowdown, but now the Czech economyis beginning to show signs of growth. The activitylevel in the Czech Republic is still relatively low.

The Czech Republic is a very open economy. A largeshare of its exports goes to Germany. The upturnin the Czech Republic will therefore proceed in linewith the upturn in Germany.

In comparison with the rest of the region, theCzech banking sector is relatively healthy.

Over the next twelve months, we have a neutralview on CZK against EUR and DKK.

CZK has already recovered considerably after thestrong weakening in 2008/09.

The Czech central bank (CNB) took the market bysurprise with an interest-rate reduction at its

meeting in early May. Together with the currentfocus on the debt problems in the euro zone thismay delay the time for interest-rate hikes andprevent a further strengthening of CZK.

Price triggers Risk factors The CNB begins lifting its interest rates from the

record-low 0.75% (the prospects are relativelylong).

Focus on the debt problems in the euro zone fades. The global upswing including the improvement in

German and Czech economic growth continues.

Concern about the debt problems in the euro zoneescalates. The Czech Republic does not show thesame vulnerability with respect to publicindebtedness as for instance Greece but the themestill tends to have an adverse effect on CZK.

The CNB lowers its interest rates even further. The global economic upswing is long in coming.

Czech koruna - CZK

14/27


15/27


By Linda Vestergaard


GDP growth (Q4 2009 (q/q)) -13.3%






Poland has successfully liberalised its economy since 1990. First in line to adopt the euro. Largest exportcountries: Germany (24.4%), France (6%) and Italy (5.9%). Large industries: machinery, iron, steel, coal,chemicals, ships. GDP per sector: Service (67.3%), Manufacturing industry (28.1%), Agriculture (4.6%).

EUR/PLN incl. forecast and forward rates Current account (C/A)

Current AccountCurrent Account % GDP

Source: Reuters EcoWin

01 02 03 04 05 06 07 08 09

% G D P

-5,5

-5,0

-4,5

-4,0

-3,5

-3,0

-2,5

-2,0

-1,5

-1,0

B i l l i o n P L N

-17,5

-15,0

-12,5

-10,0

-7,5

-5,0

-2,5

Fundamental valuation Investment case As the only country in the region, Poland came

through the global economic slowdown withoutnegative growth rates. Notably domestic demandsupported growth. Poland is in a strongfundamental position for the period ahead.

Foreign-currency loans make up a lower proportionthan in e.g. Hungary - they constitute a lower riskfor the economy.

Polands weak point is the budget deficit whichwas 7.5% of GDP in 2009.

The zloty is still undervalued; we expect the zlotyto appreciate against the euro over the next 12months.

The Polish central bank will begin to hike interestrates before the ECB. This will most likely nothappen until early 2011.

The degree of focus on the debt problems in partsof the eurozone may determine the timing and thespeed of a zloty appreciation.

Price triggers Risk factors The governments privatisation plans for 2010

should support the zloty. Focus on debt problems in the euro zone fades. The Polish central bank begins to hike rates. We may see positive surprises from this years

budget deficit. If so, it would be positive for the

zloty.

Zloty is one of the regions most liquid currencies andis used to take a negative view on the region.

If the pressure on the euro continues, there is a riskthat the zloty may appreciate against the euro.

Higher-than-expected budget deficit. In April, the Polish central bank intervened for the

first time in ten years against the zloty. Furtherintervention is a risk but the new Central-BankGovernor Belka appears less willing to use the intervention tool.

Polske zloty PLN

15/27


16/27




GDP growth (Q4 2009 (q/q)) 0.9%






Hungary is dependent on exports to the other EU countries. The country has challenges due to high private indebtedness inforeign currencies. Largest export countries: Germany (25.4%), Italy (5.2%), Romania (5.1%). Large industries: mining,machinery, textiles, chemicals. GDP per sector: Service (62.4%), Manufacturing industry (34.3%), Agriculture (3.4 %).

EUR/HUF incl. forecast and forward rates Current account (C/A)



01 02 03 04 05 06 07 08 09

% G D P

-9

-8-7

-6

-5

-4

-3

-2

-1

0

1

2

B i l l i o n H U F

-500

-400

-300

-200

-100

0

100

Fundamental valuation Investment case An economic upswing is very dependent on rising export

demand (exports account for approx. 80% of GDP). TheHungarian authorities are therefore not interested in amuch stronger forint. At the other end is the large shareof foreign-currency loans.

At the parliamentary election in April, Fidesz received2/3 of the votes. This gives the new government thepossibility to implement reforms which are necessary toincrease the countrys potential growth rate. There aredoubts about the governments willingness to do so.

So far, the new government has not acted in a waywhich can be considered market friendly. In addition,the recent routine negotiaions with the IMF have beeninterrupted. This means that the political risks involvedin HUF have increased.

The central bank should be ready to implementextraordinary interest-rate hikes/intervention , if EUR/HUF increases to around 300.

The fundamental case should prevent appreciation of the forint.

Price triggers Risk factors The political development is currently decisive for the

forint. The new governments future cooperation withthe IMF may for instance be crucial (the current loanprogramme expires in October 2010). The plannedexamination in July was interrupted.

Hungary is not in acute need of liquidity, but if EUR/HUFshould be able to return to the 265/280 range, it isnecessary that the cooperation with the IMF is back ontrack.

The forint is vulnerable to the current negative focus onthe debt problems in the eurozone since Hungary showssome of the same vulnerabilities. The importantdifference is that Hungary initiated the consolidation of the public finances already in late 2008 and has a betterstarting point than e.g. Greece.

Political announcements from the government whichhas just taken up office.

The cooperation with the IMF does not continue. Increasing risk aversion.

Hungarian forint HUF

16/27


17/27





GDP growth (Q1 2010 (q/q)) 0.1%


Unemployment 14.4%




The Turkish economy is a mix between modern industry and trade and a traditional agricultural sector. The largesttrading partners are (% of exports): Germany (9.8%), UK (6.2%) and China (7.8%). Large industries: textile, auto andelectronics. GDP per sector: Service (45.8%), Manufacturing industry (24.7%), Agriculture (29.5%).

EUR/TRY incl. forecast and forward rates Current account (C/A) 4 months average



90 92 94 96 98 00 02 04 06 08

% G D P

-7

-6-5

-4

-3

-2

-1

0

1

2

3

4

B i l l i o n U S D

-12,5

-10,0

-7,5

-5,0

-2,5

0,0

2,5

Fundamental valuation Investment case The upswing has now gained a firm foothold in

Turkey, and Turkey will report positive economicgrowth again this year. This is supported by recentactivity indicators in Turkey.

A relatively healthy banking sector will support theupswing.

The government is working on initiatives to securefiscal-policy discipline in Turkey. This is positiveand will reduce the risk involved in Turkish assetsover the long term.

Seen in relation to before the sale of risky assets in2008, the lira is still weaker against the euro andthe US dollar still catch-up potential.

The lira is a dollar-related currency, i.e. ourexpectations of a fall in EUR/USD will support thelira against the euro.

The timing of a TRY strengthening will for instancedepend on when the CBRT begins to signal hikes.

Price triggers Risk factors The CBRT begins raising its interest rates from the

record-low 7%. This happens before the ECB andthe Fed begin raising their interest rates, i.e. therelative risk premium on the lira increases. Weanticipate the first interest-rate hike in Turkey inearly 2011.

Weaker euro/stronger US dollar.

The global upswing continues also in Turkey. General risk appetite.

The largest risk for the lira against the euro iscurrently a sharp appreciation of the euro againstthe US dollar.

The global economic upswing is long in coming. Too aggressive and too early withdrawal of

monetary easing from the ECB and the Fed. Debt problems in the euro zone escalate with a

resultant general re-assessment of country risk. The CBRT maintains interest rates at the current

6.50% rather than beginning to hike interest rates.

Turkish lira TRY

17/27


18/27


By Kent Bk Iversen


GDP growth (Q1 2010 (q/q)) 1.2%


Unemployment 5.1%




Mexico is also called the 51st state of the US since the country is so dependent on exports to the US. Largestexport countries: the US 80.5%, Canada 3.8% and Germany 1.4%. Large industries: food, beverages, tobacco, oiland chemicals. GDP per sector: Service (65%), Manufacturing industry (31%), Agriculture (4%).

EUR/MXN incl. forecast and forward rates Current account (C/A)



03 04 05 06 07 08 09

% G D P

-0,300

-0,275

-0,250

-0,225

-0,200

-0,175

-0,150

-0,125

-0,100

-0,075

B i l l i o n M X N

-50

-45

-40

-35

-30

-25

-20

-15

-10

-5

Fundamental valuation Investment case We expect growth of 4% in 2010 and 2011 after the

worst recession in 2009 in living memory. The IMFs growth expectations of Mexico have been

revised up. Much depends on developments in the US which

accounts for about 80% of Mexicos exports.

Given expected solid US growth in 2010 (3.2%) and2011 (2.9%), exports are solidly supported.

Good signs that the domestic economy will also begrowth engine. Unemployment has fallen from 6.5%

We expect the peso to strengthen against both USDand EUR. Still catch-up potential to the levels beforethe Lehman collapse in the autumn of 2008.

MXN will appreciate the most against EUR in ascenario with a concurrent fall in EUR/USD. Ourexpectations of EUR/USD at 1.23 at three months

term should therefore be supportive of MXN. Theopposite will be the case for our expectations of EUR/USD at 1.33 at 12 months term.

Price triggers Risk factors MXN has high correlation with USD so continued USD

appreciation will support MXN against EUR. US growth and employment data. Mexican growth and inflation data. If the recovery gains momentum, the country may be

upgraded. S&P downgraded Mexico last year. Mexicostill has an investment-grade rating with stableoutlook at the three major credit rating agencies.

USD weakening is a risk factor. Rising concern about economic growth in the US. We see higher focus on drug-related violence because

a prominent local politician was murdered prior tothe local elections on 4 July. If the violence escalates,it may weaken confidence around Mexico.

Intervention the central banks purchase of USD. Political deadlock in Mexico. The Liberals hold the

presidency and the Social Democrats are biggest inthe parliament so reforms are difficult.

Mexican peso MXN

18/27


19/27


By Kent Bk Iversen


GDP growth (Q1 2010 (q/q)) 2.7%


Unemployment 7.5%




South Americas largest economy and one of the powerful BRIK countries. Has since 2002 improved its economy inkey areas. Largest export countries: the US (13.7%), Argentina (8.7%) and China (8.1%). Large industries: textiles, auto,chemicals and wood. GDP per sector: Service (67.7%), Manufacturing industry (25.8%), Agriculture (6.5%).

EUR/BRL incl. forecast and forward rates Current account (C/A)


04 05 06 07 08 09 10

% G D P

-2,0

-1,5

-1,0

-0,5

0,0

0,5

1,0

1,5

2,0

B i l

l i o n U S D

-5

-4

-3

-2

-1

0

1

2

3

Fundamental valuation Investment case Brazil has escaped from the crisis; the GDP level prior

to the crisis was reached already in Q4 2009. In Q1,economic growth was 9.0% y/y.

We have just revised up our growth estimate for full2010 to 7.5% and 4.7% for 2011.

Economic growth will push up inflation. Mostrecently calculated at 4.84%. Still within the target of 2.5% 6.5%.

The country is gaining influence (BRIK country) and isin focus on the global political scene.

The real is supported by an attractive interest-ratelevel. Interest rates were increased by 2 x 75 bps plus1 x 50 bps in 2010 to 10.75%.

Further interest-rate hikes are in store. We expect aninterest rate of 12.50% at 12 months term.

A less dollar-related investment in Latin Americathan MXN and COP.

Against USD, BRL is weaker than before the Lehmancollapse in 2008, so still catch up. Against EUR, BRLis weaker, so limited potential.

Price triggers Risk factors Brazil has a BBB- rating (lowest investment grade). Is

in a strong position for an upgrade. Presidential election in October. Lulas line is

expected to be continued, which is positive for BRL. Fiscal tightening after the presidential election will

be welcomed by the financial markets. Still strong domestic growth and fair exports to

growth areas such as the US and China make thecountry immune to the eurozone crisis.

Intervention purchase of USD against BRL. Higher taxes on capital flows. In late 2009, the

government introduced a 2% tax on capital inflows. Presidential election in October. Keep an eye on

announcements regarding a more relaxed fiscalpolicy and whether any candidates question theindependence of the central bank.

Negative news on public indebtedness. Rising concern about global economic growth.

Brazilian real BRL

19/27


20/27


By Kent Bk Iversen


GDP growth (Q1 2010 (q/q)) 1.1%


Unemployment 25.2%




Many natural resources and healthy banking sector but after-effects of apartheid e.g. high unemployment.Largest export countries: Japan (11.1%), The US (11.1%) and Germany (6.8%). Large industries: mining,machinery and textiles. GDP per sector: Service (64.4%), Manufacturing industry (32.1%), Agriculture (3.5%).

EUR/ZAR incl. forecast and forward rates Current account (C/A)

Current Account Current Account % GDPSource: Reuters EcoWin

96 98 00 02 04 06 08 10

% G D P

-8

-7

-6

-5

-4

-3

-2

-1

0

1

B i l l i o n Z A R

-45

-40

-35-30

-25

-20

-15

-10

-5

0

5

Fundamental valuation Investment case The FIFA World Cup is well over with exclusively

positive press coverage. The FIFA World Cup was afine exposure of the country.

The FIFA World Cup supports GDP directly in Q2-Q3.Then the contribution will be more uncertain, but wesee more gains than risks for South Africa.

Inflation under control and within target Too many South Africans live on public aid.

Constitutes a risk to public finances but alsopotential if they are educated and employed.

Buy the rand against the euro, e.g. via 10-year bonds.In July, the y-t-m fell from 8.90% to 8.40%. We believethat the fall will continue to 8.25% at end-2010.

High real interest rate (almost 4%) supports the rand Debt crisis in the eurozone does not spoil the global

growth picture, which is very positive. Especially Asiais on the rise, which will support the rand due to thelarge export of commodities to Asia.

We see a moderate strengthening towards USD. Wesee ZARDKK at 0.77 at 12 months term (=EURZAR at9.64 .

Price triggers Risk factors South Africa is on negative outlook at S&P and Fitch.

Change of negative outlook will be positive. Price rises of commodities (our main scenario). Increases in the US equity markets are usually

supportive of ZAR. Continued fair growth indicators combined with an

inflation rate which is still under control.

South Africa is currently on negative outlook at S&Pand Fitch. A downgrade will be negative.

Falling US equity markets and price declines oncommodities.

Currently concern about US economic growth. If theconcern about growth spreads to the Asianeconomies, it is bad news for ZAR since South Africabenefits from exports to Asia.

The current account deteriorates again. Furtherdeterioration is negative.

South African rand ZAR

20/27


21/27




GDP growth (Q1 2010 (q/q)) 0.5%


Unemployment 4.2%




China has moved from planned economy to a rapidly growing market economy and is now a key player in the globaleconomy. Largest export countries: The US (17.7%), Hong Kong (13.3%) and Japan (8.1%). Large industries: mining, consumerdiscretionaries and machinery. GDP per sector: Manufacturing industry (48.6%), Service (40.5%), Agriculture (10.9%).

USD/CNY incl. forecast and forward rates Current account (C/A)


04 05 06 07 08 09

% G D P

3

4

5

6

7

8

9

10

11

B i l

l i o n U S D

50

100

150

200

250

300

350

400

450

Fundamental valuation Investment case Until mid-2008, the exchange-rate policy in China

aimed at allowing CNY to strengthen graduallyagainst USD. But the global economic slowdownhit China too and the Chinese Central Bank (PBoC)changed its policy. Since mid-2008 and up to mid- June 2010, CNY was fairly stable against USD at6.83.

The PBoC has already begun to tighten banksreserve requirements and on 19 June the PBoCannounced increased flexibility of the yuan.

In principle, the PBoCs statement of increasedflexibility of the yuan does not vow anything aboutfuture appreciation of the currency.

We expect it will lead to appreciation of the yuanagainst the US dollar.

It will not be a revaluation of the yuan but agradual appreciation of the yuan against the USdollar by 5-6% a year.

Price triggers Risk factors Continued strong growth indicators from China

although growth is expected to fall slightly.Particularly the development of Chinas exports isimportant to yuan appreciation.

Global growth continues to show signs of improvement.

A long period with a weakening of the US dollarmay lead to a sharper appreciation than the 5%-6%against the US dollar a year.

Disappointing Chinese exports may put a damperon a yuan appreciation.

So will a period of sharp appreciation of the USdollar. It is not unlikely that such a scenario maylead to a rise in USD/CNY.

Increasing risk aversion.

Chinese yuan CNY

21/27


22/27


Majors & skandisAgainst

EUR Consensus USD Consensus DKK Consensus GBP* Consensus

EUR

Spot - - 1.29 - 7.45 - 1.19 -3M - - 1.23 1.20 7.45 7.45 1.20 1.25

6M - - 1.27 1.20 7.45 7.45 1.22 1.25

12M - - 1.33 1.20 7.45 7.45 1.25 1.25

USD

Spot 1.29 - - - 5.78 - 1.53 -3M 1.23 1.20 - - 6.06 6.21 1.48 1.50

6M 1.27 1.20 - - 5.87 6.21 1.55 1.50

12M 1.33 1.20 - - 5.60 6.21 1.66 1.50

GBPSpot 0.84 - 1.53 - 8.86 - - -3M 0.83 0.80 1.48 1.50 8.98 9.31 - -

6M 0.82 0.80 1.55 1.50 9.09 9.31 - -

12M 0.80 0.8 1.66 1.50 9.31 9.31 - -

JPY

Spot 112 - 87 - 6.65 - 133 -3M 110 112 89 93 6.77 6.65 133 140

6M 115 115 91 95 6.48 6.51 140 143

12M 120 115 90 95 6.21 6.51 150 143

CHF

Spot 1.34 - 1.04 - 5.54 - 1.60 -3M - 1.36 - 1.13 - 5.48 - 1.70

6M - 1.36 - 1.13 - 5.48 - 1.70

12M - 1.36 - 1.13 - 5.48 - 1.70

NOKSpot 7.96 - 6.18 - 0.94 - 9.46 -3M 8.00 7.69 6.50 6.41 0.93 0.97 9.64 9.61

6M 7.95 7.60 6.26 6.33 0.94 0.98 9.70 9.50

12M 7.90 7.60 5.94 6.33 0.94 0.98 9.88 9.50

SEK

Spot 9.41 - 7.30 - 0.79 - 11.18 -3M 9.50 9.30 7.72 7.75 0.78 0.80 11.45 11.63

6M 9.40 9.22 7.40 7.68 0.79 0.81 11.46 11.53

12M 9.35 9.22 7.03 7.68 0.80 0.81 11.69 11.53

DKK

Spot 7.45 - 5.78 - - - 8.85 -3M 7.45 7.45 6.06 6.21 - - 8.98 9.31

6M 7.45 7.45 5.87 6.21 - - 9.09 9.31

12M 7.45 7.45 5.60 6.21 - - 9.31 9.31

Note: All cross rates are quoted in accordance with inter-bank conventions except for those in the column markedwith an asterisk (*); these cross rates have GBP as their base currency. The consensus estimates are based on aBloomberg survey on FX estimates. Please note: The consensus estimates may deviate from estimates based on crossrate calculations.Source: Bloomberg/Jyske Bank

FX forecasts including consensus

22/27


23/27


Emerging MarketsAgainst

EUR Consensus USD Consensus DKK Consensus GBP* Consensus

CZK

Spot 25.18 - 19.51 - 0.30 - 29.88 -3M 25.60 25.10 20.81 20.92 0.29 0.30 30.84 31.38

6M 25.50 24.80 20.08 20.67 0.29 0.30 31.10 31.00

12M 25.50 24.80 19.17 20.67 0.29 0.30 31.88 31.00

PLN

Spot 4.09 - 3.17 - 1.82 - 4.85 -3M 3.95 3.92 3.21 3.27 1.89 1.90 4.76 4.90

6M 3.90 3.85 3.07 3.21 1.91 1.94 4.76 4.81

12M 3.80 3.85 2.86 3.21 1.96 1.94 4.75 4.81

HUFSpot 285.68 - 221.5 - 0.26 - 339.09 -3M 280 270 228 225 0.27 0.28 337.35 338

6M 270 270 213 225 0.28 0.28 329.27 338

12M 270 270 203 225 0.28 0.28 337.50 338

TRY

Spot 1.96 - 1.52 - 3.80 - 2.33 -3M 1.91 1.90 1.55 1.58 3.91 3.93 2.30 2.37

6M 1.91 1.92 1.50 1.60 3.91 3.88 2.32 2.40

12M 1.93 1.92 1.45 1.60 3.86 3.88 2.41 2.40

MXN

Spot 16.44 - 12.75 - 0.45 - 19.52 -3M 15.68 14.64 12.75 12.20 0.48 0.51 18.89 18.30

6M 15.88 14.604 12.50 12.17 0.47 0.51 19.36 18.26

12M 15.63 14.604 11.75 12.17 0.48 0.51 19.53 18.26

BRLSpot 2.27 - 1.76 - 3.29 - 2.69 -3M 2.25 2.1 1.83 1.78 3.31 3.49 2.71 2.67

6M 2.29 2.1 1.80 1.76 3.26 3.53 2.79 2.64

12M 2.26 2.1 1.70 1.76 3.30 3.53 2.83 2.64

ZAR

Spot 9.60 - 7.44 - 0.78 - 11.40 -3M 9.53 9.4 7.75 7.80 0.78 0.80 11.48 11.70

6M 9.53 9.4 7.50 7.85 0.78 0.79 11.62 11.78

12M 9.64 9.4 7.25 7.85 0.77 0.79 12.05 11.78

CNY

Spot 8.75 - 6.78 - 0.85 - 10.38 -3M 8.24 8.0 6.70 6.70 0.90 0.93 9.93 10.05

6M 8.38 7.9 6.60 6.61 0.89 0.94 10.22 9.92

12M 8.58 7.9 6.45 6.61 0.87 0.94 10.72 9.92

Note: All cross rates are quoted in accordance with inter-bank conventions except for those in the column markedwith an asterisk (*); these cross rates have GBP as their base currency. The consensus estimates are based on aBloomberg survey on FX estimates. Please note: The consensus estimates may deviate from estimates based on crossrate calculations.Note: The forecasts for TRY, MXN, BRL, ZAR and CNY are against USD.Source: Bloomberg/Jyske Bank

FX forecasts including consensus

23/27


24/27


Yield outlook government bondsCentral-bank

rate1 years 2 years 5-year* 10 years 30 years

The USCurrent 0.25% 0.25% 0.58% 1.70% 2.96% 3.99%

High 0.25% 1.40% 2.10% 3.40% 4.25% 5.25%

Low 0.00% 0.25% 0.55% 1.70% 3.00% 3.75%

The euro zone Current 1.00% 0.72% 0.75% 1.63% 2.65% 3.34%

High 1.00% 1.40% 1.75% 2.65% 3.75% 4.70%

Low 1.00% 0.40% 0.45% 1.40% 2.50% 3.25%

DenmarkCurrent 1.05% 0.55% 0.78% 1.37% 2.73% 3.29%

High 1.05% 1.65% 1.95% 2.50% 3.90% 4.70%

Low 1.05% 0.40% 0.50% 1.15% 2.65% 3.25%Note: 4-year yields, DenmarkSource: Bloomberg/Jyske Bank

Commodities forecast average pricesPrice 1 st contract Q3 2010 Q4 2010 Q1 2011 Q2 2011 Ave. 2010 Ave. 2011

WTI Crude oil (USD/bl) 79 75 80 85 88 78 90

Brent Crude oil (USD/bl) 78 74 79 84 87 77 89LME Aluminium

(USD/tonne) 20442100

2000 2000 2000 - -LME Copper (USD/tonne) 7010 6800 7200 7300 7700 - -Source: Bloomberg/Jyske Bank

Economic forecasts

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FX SPOT ONFX Research 26.07 .2010 Jyske Markets

Chart 1: EUR/USD

Chart 3: EUR/CHF

Chart 5: EUR/NOK

Chart 7: EUR/CZK

Chart 2: EUR/GBP

Chart 4: EUR/JPY

Chart 6: EUR/SEK

Chart 8: EUR/PLN

1,10

1,20

1,30

1,40

1,50

1,60

1,70

jul 05 jul 06 jul 07 jul 08 jul 09 jul 10

EUR/USD

1,30

1,35

1,40

1,45

1,50

1,55

1,60

1,65

1,70


EUR/CHF

7,00

7,50

8,00

8,50

9,00

9,50

10,00

10,50


EUR/NOK

22

23

24

25

26

27

28

29

30

31

32

33


EUR/CZK

0,60

0,65

0,70

0,75

0,80

0,85

0,90

0,95

1,00


EUR/GBP

100

110

120

130

140

150

160

170

180


EUR/JPY

8,50

9,00

9,50

10,00

10,50

11,00

11,50

12,00


EUR/SEK

3

3,5

4

4,5

5

5,5


EUR/PLN

5 year historical FX rates





Note: Past performance is not a reliable indicator of future performance





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FX SPOT ONFX Research 26.07.2010 Jyske Markets

Chart 9: EUR/HUF

Chart 11: EUR/MXN

Chart 13: EUR/ZAR

Chart 10: EUR/TRY

Chart 12: EUR/BRL

Chart 14: EUR/CNY

220

240

260

280

300

320

340


EUR/HUF

10

12

14

16

18

20


EUR/MXN

6

7

8

9

10

11

12

13

14

15

16


EUR/ZAR

1,50

1,60

1,70

1,80

1,90

2,00

2,10

2,20

2,30

2,40


EUR/TRY

2

2,2

2,4

2,6

2,8

3

3,2

3,4

3,6


EUR/BRL

8

8,5

9

9,5

10

10,5

11

11,5


EUR/CNY







5 year historical FX rates

Note: Past performance is not a reliable indicator of future performance

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FX SPOT ONFX Research 26.07.2010 Jyske Markets

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 anyresponsibility for the correctness of the material nor any liability for transactions made on the basis of the informationor the estimates of the report. The estimates and recommendations of the research report may be changed withoutnotice. 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.

Conflicts of interest Jyske Bank has prepared procedures to prevent conflicts of interest. These procedures have been incorporated in thebusiness 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 theyprepare 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 researchreports.

Read more about Jyske Bank's policy on conflicts of interest at www.jyskebank.dk/terms

Risk FX, money market and/or commodity investment involves risk. Movements in the credit market, the sector and/or thenews flow, etc. regarding the i ssuer may affect the exchange rate/the interest rate/the price of the commodity. See the front page of the research report for our view of the risk associated with the currency/interest rate/commodityinvestment. The risk factors and/or the sensitivity calculations stated in the report should not be regarded asexhaustive.

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.

jyske bank jul 26 fx spot on

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