Danske Research Team
Danske Bank A/S
The dollar has in general been supported over the recent thin Easter trading days reflecting market expectations that the US economy has continued to improve and that the Fed pricing all in all is very dovish despite the recent soft comments from Yellen. EUR/USD is trading marginally below 1.380 this morning and USD/JPY above 102.70. Note that the recent CFTC/IMM data showed that speculators in general have slashed long USD positions but all in all no major moves in the global FX markets over Easter (see IMM table on page 2 for details).
EUR/NOK saw a bit of support the last couple of trading days as the market liquidity has been very thin. We do not believe the moves reflects that EUR/NOK will start a new trend higher this week, especially as oil is trading at a seven-week high. In Sweden all eyes are on the Riksbank and today's labour market figures will be followed closely and have the potential to move EUR/SEK a bit higher. According to our monitors, market currently price in an accumulated 17 bps rate cut in Sweden (see page 3 for an overview) and thus a test of the strong technical resistance level at 9.1695 still seems likely.
The situation in Ukraine is back on the agenda again after the international agreement to avert wider conflict in Ukraine faltered on Monday. Today US Vice President Joe Biden meets with Ukrainian Acting President and Prime Minister. Further escalation of the crisis is likely to renew the pressure on the RUB and a negative sentiment could still spread to other EM markets. Note also that early tomorrow morning the Chinese flash estimate for the Markit/HSBC manufacturing PMI for April is released. This might also have an impact on investors appetite for EM and commodity currencies. We expect it to continue to decline to 47.6 from 48.0 in March. Currently, it looks like April will mark the bottom.
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