MARKET DRIVERS – CURRENCIES
FX Research • 26.07.2010 • Jyske Markets
Today’s Comment
The long-awaited result of the stress test of
the banking sector in the euro zone was
published on Friday and seven out of the total
of 91 banks flunked.
The results being published, one should think
that the markets should calm down. As we
stated on Friday, already before the
publication the test was strongly criticised for
not being sufficient transparent, and several
observers questioned whether the stress
scenarios of the test were tough enough to
reveal a sufficient number of the banks that
would be at risk if the global economy slows
down again. According to the macroeconomic
scenario that the test applies to 2010 and
2011, the 91 banks will need to raise EUR
3.5bn, and offhand this seems to be on the low
side compared to what many guessed at
before the results of the tests were published.
With respect to transparency, there are
already several indications of scepticism.
According to article in the Financial Times, six
out of the 14 German banks that were stress
tested, neglected to disclose details about
their holdings of government bonds, and
therefore there are speculations that they may
want to hide something. The purpose of the
test was to reduce tensions in the market, but
there are still open questions, and to far the
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
reactions have been fairly moderate. The euro Today’s Chart – EUR/USD
has increased a bit, but EUR/USD has still not
managed to breach last week’s peak at about
130.25.
Today, the new home sales figures for June in
the US will be published. Traditionally rising
new home sales will have a spill-over effect on
housing starts, and therefore the figure is 1,40
awaited with anxiety. New home sales rose in
the spring, but in May it fell again to the
lowest level ever. Some reasons for this were 1,35
that the tax rebate scheme ended as well as
administrative problems in connection with 1,30
the issue of mortgage loans. We expect that
new home sales increased in June, yet with
much uncertainty. The NAHB Housing Market 1,25
Index fell steeply in May and June, and that
indicates that new home sales may be
1,20
affected. Also, the supply of new homes on the
market has fallen drastically and is below the
historical average. 1,15
08 feb 22 mar 03 maj 14 jun 26 jul
Today’s Key Events
Moving Average (100D ) Moving Average (200D )
• 09:30 Trade balance (SEK)
• 16:00 New home sales (USD)
Source: Bloomberg/Jyske Bank
Read more:
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Disclaimer:
Please see the last page
MARKET DRIVERS – CURRENCIES
FX Research • 26.07.2010 • Jyske Markets

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

target
Majors
EUR/USD 129.14 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 577.08 Focus on internal imbalances in the euro zone, political disagreement and pressure on Southern European govt. bonds sent down EUR + Resistance 597.10 next 600.95
The US is somewhat ahead of Europe in the economic cycle, and for some time economic indicators have shown good trends + Support: 573.22 next 568.84 606
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 83.64 Focus on very negative public finances: Uncertainty about future fiscal tightening (and UK’s rating) may weaken pound sterling + Resistance 83.95 next 85.30
Pound sterling was under massive pressure when the financial crisis peaked, and (too) much misery has already been discounted - Support: 83.15 next 82.10 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 890.86 Focus on very negative public finances: Uncertainty about future fiscal tightening (and UK’s rating) may weaken pound sterling - Resistance 896.19 next 907.65
Pound sterling was under massive pressure when the financial crisis peaked, and (too) much misery has already been discounted + Support: 887.65 next 873.60 903
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 113.07 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 113.45 next 114.40
Risk of renewed risk aversion supports JPY slightly - Support: 111.40 next 110.00 110
Decent growth in recent months; the economy is, however, still fragile; low growth ahead and deflation may once again be a theme +
JPYDKK 6.59 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 6.69 next 6.77
Risk of renewed risk aversion supports JPY slightly + Support: 6.57 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 136.11
Please refer to the publication, CHF: stil moving upwards -

CHFDKK 547.51
Please refer to the publication, CHF: stil moving upwards -
MARKET DRIVERS – CURRENCIES
FX Research • 26.07.2010 • Jyske Markets

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

target
Scandinavia
EURNOK 797.76 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 93.34 Continuing improvement of key indicators in Norway: labour market is strong and housing market is close to its record-high levels + Resistance 93.74 next 94.57
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: 91.78 next 91.10 93.10
Correction in the equity market/rising risk aversion will still be able to put pressure on the NOK -
EURSEK 944.50 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 78.89 Still risk that SEK will suffer a blow in the event of risk aversion + Resistance 79.70 next 80.57
Riksbanken expresses optimism about the economy and thinks Sweden has been through the worst part of the crisis - Support: 77.23 next 76.04 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 • 26.07.2010 • 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 • 26.07.2010 • Jyske Markets

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