EUR/NOK. The 18 June Norges Bank (NB) meeting will be key for the short-term outlook of the cross. We expect a 25bp cut on Thursday but this is already fully priced. Instead we expect an upward revision of the NB rate path (especially for 2016) to send the cross lower towards our 1M target of 8.60 (previously 8.65). Post June we think the end of Norges Bank easing together with ECB QE will drag the cross lower. We still target EUR/NOK at 8.45 in 3M, 8.25 in 6M and 8.15 in 12M.
EUR/SEK: We lower the 1-3M forecasts to 9.30 (from 9.40) now that we see Riksbank staying on hold in July amid keeping a soft tone. We leave our 6 and 12M forecast unchanged at 9.20 and 9.00, respectively.
EUR/DKK: We expect EUR/DKK to trade close to the central rate in the coming 12M with the looming risk of a Greek default and exit from the euro on the one hand and on the other hand a gradual decline in the Danish FX reserve and the market pricing unilateral rate hikes being the key drivers.
EUR/USD : We maintain that relative rates will move in favour of a lower EUR/USD in the months ahead and are rolling our forecasts such that we maintain a bottom early autumn, now targeting 1.10 in 1M (prev. 1.13), and 1.04 in 3M (prev. 1.08). But, once eurozone (headline) inflation starts edging up in H2, the re-pricing of the Fed has come to an end, and an eventual ECB QE exit moves to the fore, EUR/USD should start its journey towards the (higher) levels warranted by medium- to longer-term fundamentals. We now project the cross at 1.06 in 6M (prev. 1.02) and 1.10 in 12M (prev. 1.08).
USD/RUB: Looking at the average USD/RUB level and the average oil price within the last 30 days, the overvalued rouble poses fiscal risks to the Russian budget. Looking ahead, we expect rouble weakness to resume, driven by significantly higher Russian inflation than in the outside world and a weak macro situation. We raise our 1M forecast for USD/RUB to 57.00 (53.00) and keep the long-run forecasts (3-12M) unchanged at 60.00, 63.00 and 70.00, respectively.
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