EUR/NOK. The NOK has in the past month suffered from a lower oil price, a surprisingly dovish Norges Bank and poor NOK liquidity. As a result we raised our forecast profile last week and now forecast the cross at 8.90 in 1M. Relative fundamentals, positioning and models, however, continue to suggest downside in EUR/NOK and we therefore still expect a stronger NOK. We target the cross at 8.70 in 3M, 8.50 in 6M and 8.40 in 12M.
EUR/SEK. While the SEK is significantly undervalued and while a rebound will come eventually, short-term drivers like monetary policy suggest the SEK will stay weak in the next couple of months. The Riksbank has made monetary policy even more accommodative and has stepped up its rhetoric regarding the currency. There is, in our view, a high probability of another rate cut before year-end given the inflation outlook. The upside in EUR/SEK remains capped by fundamentals whereas the Riksbank is ready to mitigate any premature (e.g. Grexit-induced) excessive downside dynamics. We have kept our forecast profile for EUR/SEK unchanged targeting the cross at 9.30 in 1-3M, 9.20 in 6M and 9.00 in 12M.
EUR/USD. Following a (very brief) relief rally in EUR/USD after the Greek contingent debt deal, focus should now return to the Fed as markets catch up with a first Fed hike later this year. We expect the first hike to be delivered in September, which should trigger another fall in EUR/USD in coming months. We now see the cross at 1.10 in 1M but we have kept our 3M-12M forecast unchanged. We thus target EUR/USD at 1.04 in 3M, 1.06 in 6M and 1.10 in 12M but stress that possible undershooting is likely during the autumn.
EUR/GBP. We expect relative growth and divergent monetary policy to support further EUR/GBP depreciation in the coming months targeting EUR/GBP at 0.71 in 1M (prev. 0.72) and 0.70 in 3M. We remain of the view that the Bank of England is set to hike in Q4 15 although the new 15-16 budget proposal admittedly has increased the likelihood of a later and more gradual hiking pace. Longer term, tighter fiscal policy and increased political uncertainty due to the upcoming EU referendum imply less support for the GBP. We target EUR/GBP at 0.72 in 12M (prev. 0.71).
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