Mar 01 19:55 GMT


Forex Expos

FX Forecast Update: PIIGS Unlikely to Reverse the Dollar Downtrend Print E-mail
Long Term Forecasts | Written by Danske Bank | Nov 15 10 19:04 GMT

FX Forecast Update: PIIGS Unlikely to Reverse the Dollar Downtrend

While European debt woes are weighing on the euro in the short term, we expect EUR/USD to continue 2011 higher in 2011. The divergence between monetary policies in the US and Europe is the most important factor. Low US interest rates are fuelling demand for stocks and commodities, which usually coincides with higher EUR/USD levels.

Loose US monetary policy should keep US rates low, in turn weighing on USD/JPY.

Harsh austerity measures and the BoE getting softer in 2011 will push the sterling weaker alongside the US dollar. We believe the markets will revise UK prospects lower throughout the year.

We maintain our positive views on the Scandies and forecast lower levels in both EUR/SEK and EUR/NOK over the coming quarters. However, risk-reward has been better and positioning is stretched ahead of year-end. Hence, both could be subject to a sell-off if risk appetite deteriorates.

Despite being massively overvalued, we believe the AUD, CAD and NZD will go stronger against the US dollar. Higher rates and higher commodity prices are the most important drivers.

We see EUR/CHF trading at the lower end of its 1.30-1.40 range in the next quarters before heading higher. The SNB is likely to hike before the ECB.

Full Report in PDF


About the Author

Danske Bank


This publication has been prepared by Danske Markets for information purposes only. It is not an offer or solicitation of any offer to purchase or sell any financial instrument. Whilst reasonable care has been taken to ensure that its contents are not untrue or misleading, no representation is made as to its accuracy or completeness and no liability is accepted for any loss arising from reliance on it. Danske Bank, its affiliates or staff, may perform services for, solicit business from, hold long or short positions in, or otherwise be interested in the investments (including derivatives), of any issuer mentioned herein. Danske Markets´ research analysts are not permitted to invest in securities under coverage in their research sector. This publication is not intended for private customers in the UK or any person in the US. Danske Markets is a division of Danske Bank A/S, which is regulated by FSA for the conduct of designated investment business in the UK and is a member of the London Stock Exchange. Copyright (©) Danske Bank A/S. All rights reserved. This publication is protected by copyright and may not be reproduced in whole or in part without permission.

Latest in Long Term Forecasts

Facebook MySpace Twitter Digg Delicious Google Bookmarks 

Analysis Reports

Central Bank Analysis
Economic Data Reviews
Technical Analysis

Forex Brokers © 2017 All rights reserved.