September 2010: Economic slowdown confirmed, event risks ahead

- "We expect EUR/USD to trade in limbo in the absence of a clear trend in relative rates over the next half year year. Beyond this, we continue to find more dollar negative factors and expect EUR/USD to head moderately higher."
- "We see only limited downside potential for USD/JPY after BoJ's intervention. USD/JPY can stay subdued for a while though with China buying JGBs. USD/JPY belongs in the 90-100 though."
- "The pound is in our view overbought according to short-term financial factors and we forecast EUR/GBP slightly higher on 3-6 months. Sterling weakness will, however, be limited by the stronger dollar. GBP is undervalued from long-term estimates though and EUR/GBP can eventually break below 0.80."
- "We expect the CHF to stay strong over the next half year, backed by sound Swiss data and the outlook of higher rates. EUR/CHF will rise when ECB sharpens rhetoric and EUR risks gradually diminishes."
- "We maintain our positive views on the Scandies and foresee lower levels in both EUR/SEK and EUR/NOK over the coming quarters. Risk-reward has been better though and both can be subject to a sell-off if risk appetite disappears from markets again."
- "We expect to see EUR/DKK trading in a narrow range and the Danish Central Bank to actively monitor the krone. Normalisation of rates can occur in the latter part of our forecast horizon."
- "We like AUD and NZD for now but acknowledge that both are trading at overvalued levels."

DenDanske FX Forecast Update Sep2010

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