MARKET DRIVERS – CURRENCIES

FX Research • 22.07.2010 • Jyske Markets

Today’s Comment
The latest PMI figures for the industry and
service sectors in the euro zone will be
released today. The index - reflecting
European purchasing managers’ view of the
economic situation - will be scrutinized as
the most recent PMI figures signalled
increasing activity in both sectors. We
expect that the growth rate will be lowered a
bit and that the PMI figures for the industry
as well as the service sectors will fall a bit,
which would be in line with the small
appetite today and tomorrow. Today’s Chart – PMI manufacturing & PMI service (Euro Zone)
Beforehand, Bernanke’s address before the
Senate yesterday had been awaited with
some anxiety, as after the interest-rate 65
meeting in June the Fed seemed somewhat
more concerned about the economy than 60
was previously the case and because it
suggested that further monetary easing
may be in the offing should the situation 55
deteriorate further. The speech did not,
however, reveal much new information to 50

declines in recent months. We do, however,
also expect that the PMI figures will still
signal a solid increase in activity.
Otherwise the results of the stress test of
the European banking sector is on
everybody’s mind (to be released Friday
afternoon). Already now the test has been
subject to strong criticism as it is not clear
how the test is structured and which stress
scenarios are tested. If the test is too hard,
many banks will ‘fail’, and that may result in
panic in the financial markets, but if the test
is not hard enough, its credibility will most
likely be questioned.
This issue has made the headlines in recent
days, and we think it will still affect risk
Index
the market considering the minutes of the
monetary-policy meeting in June, even
though Bernanke indicated that any 45
monetary easing is not imminent.
Today’s Key Events 40
• 09:30:00 PMI manufacturing (DEM)
• 09:30 PMI service (DEM) 35
• 10:00 PMI manufacturing (EUR)
• 10:00 PMI service (EUR)
• 10:30 Retail sales (GBP) 30
• 14:30 Jobless claims (USD) Mar 06 Oct 06 May 07 Dec 07 Jul 08 Feb 09 Sep 09 Apr 10
• 16:00 Leading indicator (USD)
• 16:00 Existing home sales (USD) PMI Manufacturing PMI Service
• 16:00:00 Consumer confidence (EUR)
Source: Bloomberg/Jyske Bank

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MARKET DRIVERS – CURRENCIES
FX Research • 22.07.2010 • Jyske Markets

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

target
Majors
EUR/USD 127.86 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 582.83 Focus on internal imbalances in the euro zone, political disagreement and pressure on Southern European govt. bonds sent down EUR + Resistance 597.01 next 600.86
The US is somewhat ahead of Europe in the economic cycle, and for some time economic indicators have shown good trends + Support: 573.13 next 568.76 606
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 84.15 Focus on very negative public finances: Uncertainty about future fiscal tightening (and UK’s rating) may weaken pound sterling + Resistance 84.80 next 85.30
Pound sterling was under massive pressure when the financial crisis peaked, and (too) much misery has already been discounted - Support: 83.75 next 83.20 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 885.55 Focus on very negative public finances: Uncertainty about future fiscal tightening (and UK’s rating) may weaken pound sterling - Resistance 889.64 next 895.52
Pound sterling was under massive pressure when the financial crisis peaked, and (too) much misery has already been discounted + Support: 878.62 next 873.47 903
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 110.65 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 6.73 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 -
EURCHF 134.11
Please refer to the publication, CHF: stil moving upwards -

CHFDKK 555.59
Please refer to the publication, CHF: stil moving upwards -
MARKET DRIVERS – CURRENCIES
FX Research • 22.07.2010 • Jyske Markets

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

target
Scandinavia
EURNOK 801.71 Continuing improvement of key indicators in Norway: labour market is strong and housing market is close to its record-high levels - Resistance 812 next 818
Norges Bank was one of the first ones to raise its interest rate. Even though we may be in for a slow start, we foresee 3% in the 1-year term - Support: 795 next 788 800
Correction in the equity market/rising risk aversion will still be able to put pressure on the NOK +
NOKDKK 92.92 Continuing improvement of key indicators in Norway: labour market is strong and housing market is close to its record-high levels + Resistance 93.71 next 94.55
Norges Bank was one of the first ones to raise its interest rate. Even though we may be in for a slow start, we foresee 3% in the 1-year term + Support: 91.75 next 91.08 93.10
Correction in the equity market/rising risk aversion will still be able to put pressure on the NOK -
EURSEK 945.10 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 78.76 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: 77.21 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 • 22.07.2010 • Jyske Markets

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

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

Please note: We point out that FX investment is currently associated with extraordinarily high uncertainty.
But for long-term risk tolerant investors, there may be good investment opportunities in these turbulent
times. This recommendation is only relevant for very risk-tolerant clients with the right risk profile and the
overall financial strength to cope with any loss that may be incurred.
MARKET DRIVERS – CURRENCIES
FX Research • 22.07.2010 • Jyske Markets

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