EUR/NOK. The NOK development continues to be heavily tied to how the economy is doing and thereby the oil price. A key part of the Norwegian transition phase is a weaker currency. We still expect the NOK to strengthen in H2 16, when we expect the business cycle to turn, but, in light of the fall in oil prices over the past month, we lift our forecast profile to 9.60 (from 9.40) in 1M, 9.60 (9.40) in 3M, 9.30 (9.25) in 6M and 9.00 (8.80) in 12M.
EUR/SEK. EUR/SEK will be trapped short term between the risk of Riksbank intervention if SEK appreciates too fast and strong Swedish fundamentals supporting the krona. Any intervention which could be relevant if EUR/SEK hits the 9.10-9.00 level within 3M say, should be 'defensive' in nature, i.e. no floor for EUR/SEK is likely. We have kept our 1M target intact at 9.30 and, based on recent communication from the Riksbank regarding its 'SEK preferences', we raise our forecasts further out to 9.30 (9.20) in 3M, 9.20 (9.10) in 6M and 9.00 (8.90) in 12M.
EUR/DKK. We expect EUR/DKK to fall to 7.4550 on a 1M horizon and stay at this level on a 3-12M horizon (revised down from 7.4600) on the back of a risk of further ECB easing, a lower net position and the risk of the market pricing in an additional DN hike.
EUR/USD. While relative rates could still weigh near term on markets pricing more in the way of Fed-ECB divergence, we continue to see the cross staying within the 1.05-1.10 range on a 1-3M horizon. We stress that the key story for 2016 will be that of a EUR/USD rebound as cyclical, valuation, flows and positioning are set to be supportive of the cross. We have left our forecasts unchanged and thus still project the pair at 1.16 in 12M.
USD/CNY. We look for further depreciation of the CNY as market pressure will persist and diverging monetary policy continues to move in favour of the USD versus CNY. We see USD/CNY rising to 7.00 on 12m.
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