Seb FX Scorecard Cs - 20130123

WEDNESDAY
Reduced tail-risks lessen safe-haven attractiveness? 23 JANUARY 2013
During the past three years we have expressed a continuing bias for smaller, peripheral EDITOR
currencies at the expense of their far less attractive G4 counterparts. Large central banks Carl Hammer
continue to expand their balance sheets to reflate their respective economies, trying to + 46 8 506 231 28
counter the underlying debt related problems. This still contributes to a negative score for G4
currencies. Financial markets however are finally recovering and market risk premia decreasing.
So long as these improvements are maintained, arguably the need to diversify into smaller,
safer currencies becomes less urgent, especially when several appear expensive. Furthermore,
their central banks have been forced to cut rates as their strong exchange rates have depressed
import prices even further, while bond markets have rallied to rich levels. In our SEB FX
Scorecard we reduce both the weighting and importance of Fundamentals and Flows, and
increase them for Valuation. Nevertheless, markets remain at the mercy of politicians and
central banks, implying ongoing potentially major event risks and policy errors. Consequently,
although the allure of strong fundamentals is decreasing leaving cheaper alternatives more
attractive, we are still not prepared to recommend outright long G4 positions vs. peripherals
(apart from short-term correction trades). Our currency ranking suggests Scandies are still of
interest (we raise slightly our 6-12 months EUR/SEK and EUR/NOK forecasts) while their
commodity currency counterparts are overvalued and therefore rated neutral. While an end to
dollar depreciation is now in sight, a stronger greenback is a case for 2014 when Fed policy is
likely to become more hawkish. We therefore retain a small upward bias in our EUR/USD
forecasts for H1 2013. JPY has depreciated substantially during the past three months, even
beyond the bearish projections made in our last CS (September 2012). Following room for
short-term profit-taking, we expect additional downside. Finally, GBP will weaken as the UK
economy is far from rebalanced and likely to loose its AAA-rating soon.
BUY THE CS BASKET We recommend buying a G10 SEB FX Scorecard

currency overlay basket with the following composition Total weighted score, 3-6 mth outlook
(based on the SEB FX Scorecard). Long NOK (34%), NZD
KRW
(19%), SEK (19%), AUD (17%), CAD (6%), EUR (5%) vs TRY
short USD (13%), JPY (24%), GBP (28%), CHF (35%). NOK
RUB
SELL G2 VS SCANDIES Although the grading differencies
PLN
are now smaller as the demand for quality is fading, NOK SEK
and SEK scores are still far above G2. Scandies have NZD
furthermore weakened in the past few weeks making AUD
current levels more attractive. CNY
CAD
BUY EUR/CHF The decline in market risk premia / lower EUR
intra-euro interest rate spreads are signs that the large DKK
capital inflows to Switzerland is abating. FX Reserves have USD
also failed to increase in the last 2 months. We expect the JPY
SNB-floor to remain at 1.20 in EUR/CHF and that the GBP
overvalued Swiss franc continues to depreciate as investors CHF
seek better yielding alternatives.
-1,5 -1 -0,5 0 0,5 1 1,5
You can also find our research materials at our website: www.mb.seb.se. This report is produced by Skandinaviska Enskilda Banken AB (publ) for institutional investors only. Information and
opinions contained within this document are given in good faith and are based on sources believed to be reliable, we do not represent that they are accurate or complete. No liability is
accepted for any direct or consequential loss resulting from reliance on this document. Changes may be made to opinions or information contained herein without notice.
Currency Strategy
Forecasts and FX Scorecard

FX forecasts SEB Consensus* Contents
21-jan Q1 13 Q2 13 Q4 13 Q1 13 Q2 13 Forecasts 2
EUR/USD 1,33 1,35 1,36 1,28 1,30 1,29 The big picture 5
EUR/JPY 118 120 124 120 114 113 USD 10
EUR/GBP 0,84 0,85 0,86 0,83 0,81 0,81 EUR 12
EUR/CHF 1,24 1,27 1,29 1,30 1,21 1,22 JPY 14
EUR/SEK 8,70 8,65 8,55 8,40 8,63 8,60 GBP 16
EUR/NOK 7,45 7,35 7,25 7,25 7,36 7,31 CAD 18
EUR/DKK 7,46 7,47 7,47 7,46 7,46 7,46 AUD 20
USD/RUB 30,2 29,8 29,1 29,6 30,5 30,8 NZD 22
EUR/PLN 4,17 4,10 4,05 3,09 4,13 4,10 CHF 24
Cross rates SEK 26
USD/JPY 89 89 91 94 87 88 NOK 28
GBP/USD 1,59 1,58 1,57 1,55 1,60 1,60 DKK 30
USD/CAD 0,99 0,99 0,98 0,98 0,98 0,98 RUB 32
USD/CHF 0,93 0,94 0,95 1,02 0,93 0,95 PLN 34
AUD/USD 1,06 1,07 1,08 1,06 1,05 1,05 TRY 36
NZD/USD 0,84 0,86 0,87 0,85 0,83 0,82 KRW 38
USD/SEK 6,52 6,41 6,29 6,56 6,62 6,67 CNY 40
GBP/SEK 10,35 10,12 9,89 10,17 10,65 10,62 Guide to indicators 42
JPY/SEK 7,36 7,20 6,91 6,98 7,57 7,61 Seasonal patterns 43
CHF/SEK 7,02 6,81 6,63 6,46 7,13 7,05 SEB Quant 44
NOK/SEK 1,17 1,18 1,18 1,16 1,17 1,18 Contacts 45
USD/NOK 5,58 5,44 5,33 5,66 5,65 5,64
USD/CNY 6,22 6,19 6,17 6,10 6,21 6,17
USD/KRW 1062 1045 1030 1000 1067 1072
USD/TRY 1,77 1,74 1,72 1,68 1,79 1,80
*Bloomberg survey FX forecasts.
SEB FX G10 Scorecard, Medium Term

Weights USD EUR JPY GBP CAD AUD NZD CHF SEK NOK DKK
Fundamentals 10,0% -1 0 0 -1 0 0 +1 0 0 0 0
Carry 12,5% -1 -1 -1 -1 0 +2 +2 -1 0 +1 -1
Monetary policy 15,0% 0 0 -2 -1 0 -1 0 0 0 0 +1
Flows 10,0% -1 +1 -1 -2 -2 0 -2 0 -1 +1 -2
Valuation 20,0% +1 0 0 0 -2 -3 -3 -3 0 -1 0
Positioning 7,5% 0 -1 +4 -1 -1 0 +2 -1 -1 -1 -
Technicals 7,5% 0 0 -3 -3 +2 +2 +1 0 +2 +2 0
Liquidity 0,0% +4 +2 +4 +2 -1 -2 -3 0 -3 -3 -3
Event risk 5,0% -1 -1 +2 -1 0 0 0 0 0 0 0
Global cycle 12,5% -2 +1 -1 +1 +4 +3 +4 0 +2 +2 +1
Total weighted score -0,4 -0,0 -0,6 -0,7 -0,0 +0,2 +0,2 -0,8 +0,2 +0,4 -0,2
G10 FX Scorecard - Contributions to total score

SEK Weighted score: 0,2 NOK Weighted score: 0,4
Fundamentals Fundamentals
Carry Carry
Monetary policy Monetary policy
Flows Flows
Valuation Valuation
Positioning Positioning
Technicals Technicals
Liquidity Liquidity
Event risk Event risk
Global cycle Global cycle
-0,8 -0,6 -0,4 -0,2 0,0 0,2 0,4 0,6 0,8 -0,8 -0,6 -0,4 -0,2 0,0 0,2 0,4 0,6 0,8
2
Currency Strategy
USD Weighted score: -0,4 EUR Weighted score: 0

Carry Carry
Flows Flows
Valuation Valuation
Liquidity Liquidity
-0,8 -0,6 -0,4 -0,2 0,0 0,2 0,4 0,6 0,8 -0,8 -0,6 -0,4 -0,2 0,0 0,2 0,4 0,6 0,8
JPY Weighted score: -0,6 GBP Weighted score: -0,7

Carry Carry
Flows Flows
Valuation Valuation
Liquidity Liquidity
-0,8 -0,6 -0,4 -0,2 0,0 0,2 0,4 0,6 0,8 -0,8 -0,6 -0,4 -0,2 0,0 0,2 0,4 0,6 0,8
CAD Weighted score: 0 CHF Weighted score: -0,8

Carry Carry
Flows Flows
Valuation Valuation
Liquidity Liquidity
-0,8 -0,6 -0,4 -0,2 0,0 0,2 0,4 0,6 0,8 -0,8 -0,6 -0,4 -0,2 0,0 0,2 0,4 0,6 0,8
AUD Weighted score: 0,2 NZD Weighted score: 0,2

Carry Carry
Flows Flows
Valuation Valuation
Liquidity Liquidity
-0,8 -0,6 -0,4 -0,2 0,0 0,2 0,4 0,6 0,8 -0,8 -0,6 -0,4 -0,2 0,0 0,2 0,4 0,6 0,8
3
Currency Strategy
DKK Weighted score: -0,2

Fundamentals
Carry
Monetary policy
Flows
Valuation
Positioning
Technicals
Liquidity
Event risk
Global cycle
-0,8 -0,6 -0,4 -0,2 0,0 0,2 0,4 0,6 0,8
PLN Weighted score: 0.4

SEB FX EM Scorecard, Medium Term Fundamentals
Weights PLN RUB TRY CNY KRW
Carry
Fundamentals 10,0% 0 +2 +2 +2 +1
Monetary policy
Carry 12,5% +3 +5 +5 -1 +2
Monetary policy 15,0% 0 -1 -3 -1 -1 Flows
Flows 10,0% +2 +2 +2 +2 +2 Valuation
Valuation 20,0% -1 -2 -2 +1 +1 Positioning
Positioning 7,5% -2 -1 +1 +3 -5
Technicals
Technicals 7,5% 0 -2 +1 +2 +3
Liquidity 0,0% -4 -4 -4 0 -3 Liquidity
Event risk 5,0% 0 0 0 0 -2 Event risk
Global cycle 12,5% +2 +1 +2 +1 +2 Global cycle
Total weighted score +0,4 +0,4 +0,5 +0,0 +0,5
-0,8 -0,6 -0,4 -0,2 0,0 0,2 0,4 0,6 0,8
TRY Weighted score: 0.5

RUB Weighted score: 0.4
Fundamentals
Fundamentals
Carry
Carry
Monetary policy
Monetary policy
Flows
Flows
Valuation
Valuation
Positioning
Positioning
Technicals
Technicals
Liquidity
Liquidity
Event risk
Event risk
Global cycle
Global cycle
-0,8 -0,6 -0,4 -0,2 0,0 0,2 0,4 0,6 0,8
-0,8 -0,6 -0,4 -0,2 0,0 0,2 0,4 0,6 0,8
KRW Weighted score: 0.5

CNY Weighted score: 0
Fundamentals
Fundamentals
Carry
Carry
Monetary policy
Monetary policy
Flows
Flows
Valuation
Valuation
Positioning
Positioning
Technicals
Technicals
Liquidity
Liquidity
Event risk
Event risk
Global cycle
Global cycle
-0,8 -0,6 -0,4 -0,2 0,0 0,2 0,4 0,6 0,8
-0,8 -0,6 -0,4 -0,2 0,0 0,2 0,4 0,6 0,8
4
Currency Strategy
Big Picture: Economic recovery -> lower demand for Quality?
At long last, the global economy is beginning to

recover, albeit very gradually (and with it financial
markets generally) as record loose G4 central bank
policies gain traction in the real economy. However,
given unlimited support from policymakers, the
market outlook depends very much on the actions of
politicians and central banks; in other words their
events rather than general macroeconomic drivers will
remain most important for investors (provided, of
course, the growth recovery scenario remains intact,
as we expect). Assuming US politicians successfully
complete upcoming debt ceiling negotiations, global
markets look set to reflate. However, euro-zone
political risks remain high and are likely to become of
interest to markets later this year. Underlying Conversely, while European growth is bottoming,
imbalances within the euro-zone continue to decrease we expect only a sluggish recovery. Unemployment
given current unit labour cost and current account continues to increase, for a fifth (!) consecutive year,
developments, though very few of its citizens will to nearly 12%. Still, with sentiment and consensus
agree to the political changes necessary to make the growth expectations (2013: -0.2%) already adequately
EMU an optimal currency union. Consequently, it reflecting the current poor outlook, we see a small
would be extremely premature to rule out further upside bias to European data surprises during H1
negative headlines from Europe, otherwise absent in 2013. This adds positively to the euro outlook.
recent months.
REFLATION AND STABILISING GROWTH.
Nevertheless, positively, we expect the economic
recovery scenario, increasingly discounted by financial
markets, to continue. Global leading indicators show
signs of bottoming while, based on our internal
leading indicator, we still forecast a cautious recovery
in global growth prospects in H1 2013.
Recent SEB Research Macro updates (released Jan
2013) contain relatively few changes to growth
projections. Asia is leading the recovery while
growth in China has bottomed, at least for now (Q4
2012: +7.9% y/y). Further, while over the next six
months the US economy looks likely to expand slightly NO END IN SIGHT TO MAJOR CENTRAL BANKS
slower than had originally been expected, its outlook PRINTING MACHINES YET. All major central banks
remains relatively satisfactory, such that we forecast continue to operate with a clear easing bias. Japans
growth fairly close to trend over the next two years. new liberal government led by PM Abe is pressuring
Moreover, several sectors within the economy BOJ to adopt a 2% inflation target, and to permit
provide upside potential (housing, investments), further depreciation of the JPY. The most recent
particularly those where a growing labour force central bank comment suggests it will continue to
(construction) may add significantly to NFP going print money until USD/JPY trades at 95-100 and
forward (see below for further details regarding inflation reaches its newly adopted target. The
employment and Fed policy). government has also promised to establish a large
fund to buy foreign assets. However, previous
MOF/BOJ promises have been poorly fulfilled.
Indeed, we think it questionable whether it will
prove possible to inflate the Japanese economy
simply by adopting a higher inflation target. The
5
Currency Strategy
BOJ is already running a zero interest rate policy with WHAT ARE REASONABLE EMU RISK PREMIA? In
additional Quantitative Easing (QE) purchases August and September, ECB governor Draghi
conducted. Consequently, implementation risk is proclaimed the ECB would do whatever it takes to save
substantial given rapid JPY depreciation in recent the euro. At that time, intra-euro spreads were very
months (we have added a positive grade to JPY high reflecting very real fears the entire currency union
under Event Risk due to the risk of central banks might break down. In particular, Mr Draghi aimed to use
failure to deliver on its verbal promises). We still the OMT to restrict, and remove that part of the intra-
expect a lower JPY attributable to improving risk euro rate spread / risk premia that reflected such break-
appetite, rising global interest rates and a gradual up fears. So far, the announcement of the Outright
deterioration in the Japanese external surplus. Monetary Transactions programme has proved
successful despite Spain (and Italy) remaining outside it.
ECB POLICY FADING AS EURO-POSITIVE, YIELD- This has produced a virtuous circle of portfolio flows,
HUNGRY INVESTORS MAY BOOST EURO FURTHER. seeking to benefit from previously high rates, and
Over the past few days, news and rumours of changed contributing to a stronger euro. In a study published in
collateral rule for ECB loans and even an end to long- September 2012, the Bank of Italy* produced a
term refinancing operations have pulled Euribor and regression model that sought to estimate the fair value
for intra-euro spreads, given certain underlying
other short-term euro interest rates higher
fundamentals including debt/GDP and public budget
potentially providing additional support for the euro.
deficit/GDP ratios. The study concluded that a fair
We think it bizarre to speculate on an end to the ECBs
rate spread between 10yr German bunds and 10yr
current relaxed monetary policy stance. European Italian bonds is 200bps (today 260 bps). The IMF
banks will continue to depend on cheap financing; produced a similar study where the estimated real
consequently Euribor moves probably only reflect sovereign bond yield spreads for Spain and Italy vs.
stop-loss activity connected with bets on negative Germany, were around 150bps and 125bps,
deposit rates. Monetary policy must remain loose respectively. Continued spread tightening has therefore
given current poor growth and rising some way to run still being so far the main driver for a
unemployment, a situation likely to weigh on the stronger euro. However, most of this particular move
euro over the longer term. Nevertheless, investors has already occurred judging by fair-value levels, so
may continue to purchase GIIPS bonds as risk premia continued supportive portfolio flows are less euro
contract, and despite the fact most such flows are positive at present.
probably intra-euro in nature (like the origin of the
spread widening trade). Still, this ensures the euro
itself enjoys a small upside potential as global
investors seek yield.
* Bank of Italy: Recent estimates of sovereign risk premia

for euro-area countries #128, Sept 2012.
FED OUTLOOK STILL USD NEGATIVE... Its most

recent minutes suggest clear differences of opinion
within the FOMC board. Based on our own labour
market / inflation forecasts however, the recently
adopted implicit unemployment target of 6.5% before
leaving the zero-interest-rate-policy justifies a Fed
funds rate of 0-0.25% to 2015. We also believe the
unemployment rate must fall to 7.0% or below before
the central bank will consider an end to the current
6
Currency Strategy
QE3 programmes. Given the on-going US economic The US has moved towards a more sustainable
recovery and the Feds implicit unemployment target, external deficit (CA deficit is now approx 3%/GDP).
non-farm payrolls will be even more important for the However, the overall US situation remains weak
USD now. While we believe monetary policy will be should a rating agency decide to downgrade the
negative for the currency in H1 2013, NFP data credit rating due to a failure of upcoming
may potentially strengthen it temporarily. Over negotiations on the debt ceiling. Furthermore, the IMF
the longer term (i.e. from 2014), we expect the Fed to also expects the US CA to widen once again.
adopt a progressively tighter monetary position,
supporting the USD outlook, this has the potential to Finally, the external outlook for the UK is still
finally breaking the negative correlation to risk poor, with sterling depreciation now necessary if
appetite, subject to which the currency still trades. efforts are to continue to rebalance the economy.
There is also a risk the BOE will need to add further QE
to its APF programme. We therefore remain negative
regarding the outlook for GBP.
.AND US DEFICITS NEEDS MORE ADJUSTMENTS

TO FULLY RESTORE CONFIDENCE. As regards the
flow outlook, G4 developments during the past 12
months also suggest several interesting LONG-TERM USD OUTLOOK IS POSITIVE. The USD
consequences: euro area austerity measures are analysis is fairly clear and dependent on the following
now yielding limited positive results including factors: 1) Fed will continue to stimulate the economy
lower ULC/Current account (CA) imbalances. trying to push unemployment lower, hence in relative
Indeed, the CA 2012 annual rate of change (see terms monetary policy will be even looser compared to
graph below) is positive. Furthermore, portfolio ECB in 2013. In 2014 the US economic recovery is
flows are also rising. However, in Japan the converse opening up for and end of QE3 asset purchases,
applies. While the weak JPY-trend clearly depends this will be bearish for EUR/USD as ECB will lag this
mostly on verbal intervention so far, and promises of tightening cycle. 2) We have long awaited a
unprecedented stimulus measures, the CA continues weaker Euro in H2 2013 based on rising European
to deteriorate. political risks. Although it remains very hard to
pinpoint exactly when and what the trigger is, the
European developments are surely moving below
radar and will surface again. Current Fed policy and US
debt ceiling negotiations (add the ECB OMT program
as well) has masked the underlying fundamentals
problems of EMU. They will return we think on rising
political risk and lack of democratic support for the
necessary political integration to make EMU an
optimal currency union. We expect these to increase
H2 2013 contributing to a weaker euro / stronger USD.
IS QUALITY LESS IMPORTANT NOW? Over the next

six months we expect FX markets to be impacted by
reflationary monetary policy, stabilizing growth,
somewhat lower intra-euro rate spreads and
7
Currency Strategy
improving risk appetite. In this environment, a Positioning: 7.5% (5%)

continued cyclical recovery may not benefit the usual Technicals: 7.5% (12.5%)
suspects (currency wise). We have long been bullish Liquidity: 0% (0%)
the G10 peripheral currencies (AUD, CAD, NOK and Event risk: 5% (10%)
SEK) on the expense of their G4 counterparts. While Global cycle: 12.5% (0%)
we continue to set higher scores for them, scorecard Since there is a case for lower demand for
differences are now smaller than they have been for a alternative reserve currencies based on Quality,
long time. Peripherals became clear beneficiaries of we have reduced the weights for both fundamen-
loose monetary policies being pursued by G4 central tals and capital flows (enjoying large external
banks. Furthermore, they have also enjoyed, inter alia, surpluses is not as important as it is when market risk
strong debt/GDP ratios and positive fiscal deficit premia decline). At the same time, we have raised
outlooks, all factors which boosted their popularity the weighting for Valuation, which now has a
with investors. However, over the past 6-12 months, significant bearing on both the monetary policy
their central banks have become increasingly outlook and investor appetite for currencies. The
concerned that their currencies are becoming effect on the scorecard is that, despite the reflationary
progressively overvalued. Based on a scenario in theme we expect will impact markets this year;
which general market risk premia continue lower, commodity currencies should only outperform the
there may be a case for such currencies becoming USD slightly. Once again, the NOK is the favourite G10
unfashionable, and other better valued, higher- currency, with last weeks depreciation making a long
yielding alternatives become increasingly NOK position attractive once again. While GBP and JPY
attractive (the euro and selected EM currencies). will remain weak over the next six months, in the near-
Our 6-12 months FX forecasts have been adjusted as term we expect the JPY to correct higher. We therefore
the Scorecard signals Quality is less important. prefer to await better entry levels for a short JPY
Although generally small grading differences now, the position.
peripherals still receives higher grades.
FX FORECASTS FROM SCORECARD.
During the past 3-4 months we have targeted a move
higher in EUR/USD towards current spot levels.
Scorecard weights and grades continue to
forecast a small upside bias over the next 3-6
months. Further, we retain our preference for a
weaker euro in H2 2013 as a result of increasing
political risks in Europe. Despite progress being made,
slow internal devaluation makes a weak euro
necessary for Europe. In 2014, a more hawkish Fed
policy is more likely, also supporting the USD. As
discussed earlier, we forecast only modest upside in
commodity currencies. Currently, AUD is trapped
between a high valuation, a dovish RBA and improving
Asian/Chinese growth prospects. The long-term
Signs that quality is becoming less important include bullish technical triangle in AUD/USD is worth
the appreciation in EUR/CHF above the SNB-induced monitoring (confirmed if AUD/USD closes above
1.20-floor, a probable and continued outcome of intra- 1.0625 on a monthly basis). The September
euro rate spread improvements. We expect scorecard projection that NOK would strengthen has
EUR/CHF to continue higher, albeit more gradually. certainly proved accurate: on a trade weighted basis,
the NOK trades at new record highs. However, the
SEB FX SCORECARD AND WEIGHTS. The weights we
euro is strong, causing us to revise higher our
attach to each rating category represent key inputs in
bearish EUR/NOK projections. In the near-term,
determining the overall score for each currency.
EUR/SEK is expected to trade sideways. Like AUD,
Compared to our last Currency Strategy we have made
SEK is now trapped between its cyclical dependency
various changes:
(positive) and waning attraction as a safe-haven for
Fundamentals: 10% (20%) portfolio flows. As we expect the euro to weaken again
Monetary policy: 27.5% (25%) later this year, we still project EUR/SEK to
Capital flows: 10% (15%) depreciate towards 8.30/40 longer-term. As
Valuation: 20% (12.5%) discussed earlier, GBP and JPY are likely to
8
Currency Strategy
underperform. Moreover, the scorecard still finds few To evaluate the Currency strategy scorecard from
positive factors for the UK with the flow outlook weak, September 2012 we have, as previously, calculated
monetary policy loose, a valuation less attractive than each currencys performance against the USD from
it appears, and poor fundamentals, with the country Sep 12 until today. Two of the three currencies we
set to lose its AAA-rating. We forecast additional expected would underperform against the USD (JPY,
upside in EUR/GBP. CHF, GBP) have done so, with the JPY depreciating
EVALUATION OF THE SCORECARD APPROACH. By sharply. Meanwhile, the CHF trades largely unchanged
reconsidering and changing scorecard weights we against the greenback. Conversely, of those currencies
intend to capture what we believe will be the most we expected would outperform the dollar all except
important FX market themes and drivers. Back in the CAD have appreciated against it since then.
September last year we thought monetary policy Based on the scorecard and relative scores we also
would be an even more important FX market driver proposed a portfolio alongside our trading
with, for example, the Fed apparently likely to recommendations on the first page of our September
continue to ease monetary policy by further expanding Currency Strategy. Since Sep 12 this portfolio has
bond purchase programmes. In addition, we raised the generated a 5.4% return with a Sharp ratio at 3.63.
weight for fundamentals to reflect the ongoing theme Including the return on the proposed portfolio based
that they would continue to attract FX related inflows. on the Currency Strategy scorecard from May last year
Overall, monetary policy and fundamentals received when the new scorecard approach was introduced, the
45% of total weighting, an unusually high share, being total return is 9.85% with low volatility. In other
particularly negative for JPY, GBP, USD and CHF. words, so far the scorecard approach has proved fairly
Moreover we decided to attach a zero weight to the successful.
impact of global risk appetite because: (a) we had a
neutral view ahead of fiscal cliff negotiations although FX Scorecard portfolio return
our general expectation was improvement in risk Accumulated return since May 2012: 9.85%
12% 12%
appetite over time; and (b) the traditional relationship
between currencies and risk appetite was clearly 10% 10%
breaking down, making it hard to predict the effects of 8% 8%
changes in the latter.
6% 6%
SEB FX Scorecard 4% 4%
Performance vs USD since CS Sep-12
2% 2%
NOK 0% 0%
SEK -2% -2%

13 j
n
kt
n
15 l
ec
28 v
ug
19 v
CAD
p
a
-ju
ju
ja
no
o
-se
-ju
se
-m
-o
-d
4-
-n
-a
9-
25
5-
7-
17
26
23
AUD
EUR
Other trade ideas included in last Septembers
NZD Currency Strategy have performed in line with the
GBP scorecard outcome. In particular, we suggested selling
GBP vs. NOK, AUD vs. CAD and finally CHF and JPY vs.
CHF
SEK. Despite our AUD/CAD trade, which generated a
JPY 2.5% loss, these recommendations have yielded a
significant positive return due to a stronger NOK and
-14 -12 -10 -8 -6 -4 -2 0 +2 +4 +6 +8 SEK and weaker JPY, CHF and GBP.
9
Currency Strategy
USD Weighted score: -0,4

US dollar
Although the US economy moves slowly in the right Fundamentals
direction growth remains to slow to change the near Carry
term outlook on monetary policy and investments, Monetary policy
which eventually will support the USD. Hence short Flows
term it is difficult to have an optimistic outlook on the Valuation
USD as reflected by the current score remaining below
Positioning
average.
Technicals
ECONOMIC FUNDAMENTALS Although growth in Q4
Liquidity
probably was weak and signals on the economy from
the Beige book only indicates moderate growth there Event risk
are several positive signs from the US economy Global cycle
indicating growth should improve going forward. The
-0,8 -0,6 -0,4 -0,2 0,0 0,2 0,4 0,6 0,8
deal in Congress just before year-end also averted the
E U R speculative positio ns
full impact of the fiscal cliff. However most taxpayers U S D /C A D
12 5
Contracts (thousands)
will face a higher tax burden and we expect fiscal drag 1.35 0 E U R /U S D
10 0
to be around 1.5% of GDP this year. The deal did 1.30 0 75
neither address the spending side, nor the debt ceiling 1.25 0
50
which has to be raised before end of February to shun 1.20 0

25
0
a technical default. While Republicans probably will 1.15 0 S peculative positions -2 5
use the debt ceiling as leverage in negotiations on 04 05 06 07
more spending cuts President Obama has said that he
The lack of significant upside progress in
wont negotiate over it. Hence, positions appear even EUR/USD makes the current substantial net
more polarized today than back in summer 2011 and long speculative position a burden. Should
could cause further rating downgrades. If the the sub-1.29-area be revisited, speculative
longs will have to be reduced.
Republicans are successful the fiscal drag in 2013
could be somewhat higher than assumed while
confidence and growth will continue to suffer until a
solution has been reached. -1
MONETARY POLICY In December the Fed introduced
an additional QE-programme including USD 45bn per
month of treasury bond purchases in addition to the
USD 40bn QE3-programme related to mortgage bonds
announced in September. Both programmes are open-
ended and will probably continue as long as US
unemployment remains at least above 7% given
inflation expectations are reasonable. Although most
members supported the December decision Minutes
from the meeting revealed several FOMC-members
discussed the possibility that the bond purchase
programmes would end already sometimes this year.
As we believe the labour market recovery will be very
gradual with unemployment likely to remain above 7%
at least well into 2014 bond purchases are likely to be
more protracted than indicated by the December
Minutes. Hence, currently we believe there is little
scope for monetary policy to support the USD. 0
FLOWS The flow situation remains negative for the
USD and stronger US growth is likely to add to the US
trade deficit making the US economy more dependent
on foreign capital inflows. The political turbulence may
trigger additional downgrades which could make it
more difficult to attract inflows. Hence, near term head
winds from capital flows could increase. -1
10
Currency Strategy
US dollar SEBEER Long-term Fair value, USD Index

150
VALUATION Our internal long-term fair value model,
140
SEBEER, indicates the USD trade weighted index has
been undervalued since 2003. It seems quite clear that 130
the deviation between the indicated fair value and 120
actual dollar index coincides with the time when the 110
euro emerged as an alternative global reserve
100
currency, triggering structural rebalancing flows out of
90
the USD and into the euro. However uncertainty
related to the euro has supported the USD until 80
recently and although our internal model indicates a 70
substantial undervaluation other measures for long- 2000 2002 2004 2006 2008 2010 2012
term valuation (deviation from the long-term average USD Long-term Fair value
in a real trade weighted index) indicate the dollar is
closer to a reasonable valuation. +1 E U R speculative positio ns
U S D /C A D
12 5
POSITIONING The net positioning among speculative
1.35 0 E U R /U S D
10 0
accounts is net short the USD, indicating a belief it will 1.30 0 75
depreciate. However, in a two year perspective, the net 50
1.25 0
short position is far from being excessively (and thus 25
1.20 0
unsustainably) large. Recently there has been an 0
1.15 0 S peculative positions -2 5
increase of the net short positions, though this trend is
04 05 06 07
not strong enough to render a negative score. 0
TECHNICALS The expected short-term recovery to EUR/USD makes the current substantial net
and beyond the Nov12 high of 81.46 has so far failed long speculative position a burden. Should
the sub-1.29-area be revisited, speculative
to live up to (bullish) expectations and the market longs will have to be reduced.
seems to like it better below the yearly average than
above it. Unless breaking this mentioned reference
Technical view: USD INDEX
level, there is an inherent downside risk, but while
holding from significantly breaking support in the
79.01-78.60 area there is also a bullish alternative
possible - and extension below 78.10 is in all honesty
needed for a convincing bearish case but then only
for 76 before higher. 0
LIQUIDITY, EVENT RISK AND GLOBAL CYCLE With its
superior liquidity the USD traditionally is negatively
correlated to risk appetite although the correlation is
weaker than what we normally find. We expect risk
appetite to continue to improve over the next three to
six months which traditionally would weigh on the USD
against most other currencies. On the other hand we
expect it to partly be driven by stronger growth in the
US after politicians have solved the debt ceiling issue
currently weighing on sentiment. In such scenario
stronger US growth may also spill over into a labour
market improvement which eventually and temporarily
could change expectations on Fed policy in a more
hawkish direction. We have already observed this type
of brief USD strength on the back of positive data
surprises and it might be become more prolonged. In
addition we have added a -1 on USD-related event risk
to capture the risk for a failure in the debt ceiling
negotiations which we believe would be USD-negative
as it would hurt capital inflows from overseas.
11
Currency Strategy
The euro EUR Weighted score: 0

The euro is back in fashion. After months of deep Fundamentals
pessimism investors have turned more positive on the Carry
currency. Signs of relief in the debt crisis led to a return Monetary policy
of financial investors onto the euro capital market.
Flows
Furthermore the ECB seems to be sidelined for now. It
didnt follow other central banks in easing monetary Valuation
policy again. On the other hand, we see no signs of Positioning
relief in the real economy. All forecasts point to a very Technicals
bumpy road in the economy in the first half of 2013 Liquidity
before a cautious recovery should set in. In addition,
Event risk
markets could soon turn their focus back onto politics.
Both the Italian election and the bailout package for Global cycle
Cyprus have the potential to weigh on the currency. -0,8 -0,6 -0,4 -0,2 0,0 0,2 0,4 0,6 0,8
ECONOMIC FUNDAMENTALS Recent economic data
and leading indicators point to a very weak E U R speculative positio ns
U S D /C A D
12 5
performance of the economy in the fourth quarter of
1.35 0 E U R /U S D
10 0
2012. Weakness is likely to persist throughout the first 1.30 0 75
half of 2013 followed by a moderate recovery 1.25 0
50
thereafter. We expect GDP to contract by 0.2% in 25
1.20 0
2013. In this environment budget consolidation will S peculative positions
0
1.15 0 -2 5
remain a big challenge. On the political side, upcoming 04 05 06 07
elections in Italy (Feb) and Germany (Sep) could lead
to a delay in urgently needed structural reforms. A The lack of significant upside progress in
EUR/USD makes the current substantial net
change in the Italian government could also result in long speculative position a burden. Should
some winding back of recently implemented reforms. the sub-1.29-area be revisited, speculative
The political event risk is negative for the euro. 0
MONETARY POLICY In January the Governing Council
unanimously decided to keep record low policy rates
on hold and gave no hints about additional
expansionary measures. Thus, the ECB didnt follow
other major central banks in printing more money
which would have put downward pressure on the
currency. With the announcement of its OMT
programme the ECB has increased confidence in
financial markets which leads to more favourable
monetary conditions. Thus, there is no need for the
introduction of additional non-standard measures. We
think the ECB will keep its monetary strategy
unchanged in coming months. 0
FLOWS. In the twelve months until Oct 2012 the
current account surplus accounted to 0.9% of GDP.
Thus, the euro zone continues to face no external
imbalance which could put downward pressure onto
the currency. The improving trend in the current
account is likely to continue in coming months and will
be supportive for the euro. The IMF forecasts the
surplus in the euro zone current account to reach 1.3%
of GDP in 2013. The Oct BoP data shows that foreign
investors have increased their exposure to euro area
financial assets considerably - an indication of
increased confidence that the euro area will solve its
debt problem. Positive portfolio flows are likely to
continue. +1
12
Currency Strategy
SEBEER Long-term Fair value, EUR Index

The euro 150
VALUATION The debt crisis pushed the euro towards 140
undervalued levels last year as investors scaled back 130
on their exposures in euro assets. However after
120
Draghi saved the euro last year things have
improved, reducing the misalignment with our 110
valuation, though the currency must still be considered 100
as slightly undervalued according to our models. 90
Worth pointing out is that obviously the internal 80
competitiveness is very different within the euro zone,
70
hence the current problems. German exports could
2000 2002 2004 2006 2008 2010 2012
most likely tolerate a EUR/USD at 1.40 or higher whilst
the GIIPS-countries would need another trade- EUR Long-term Fair value
weighted depreciation of around 20-30% in order to
restore competitiveness. 0 E U R speculative positio ns
U S D /C A D
12 5
1.35 0 E U R /U S D
POSITIONING Net positioning in the euro is almost 10 0
1.30 0 75
neutral among speculative accounts. In a two year
50
perspective this should actually be considered a EUR 1.25 0
25
positive positioning as market has been net short the 1.20 0
0
euro since mid-2011. Positioning changes the last 1.15 0 S peculative positions -2 5
couple of weeks have been quite mixed with a small tilt 04 05 06 07
to the downside. With the massive amount of short The lack of significant upside progress in
contracts now neutralized changes in positioning EUR/USD makes the current substantial net
long speculative position a burden. Should
should not be a major driver of the EUR. -1 the sub-1.29-area be revisited, speculative
TECHNICALS The EUR index has come out strongly longs will have to be reduced.
from a Q3 12 downside overstretch and has even been

allowed to extend well above the fast flattening yearly Technical view: ECB EUR index
average and short-term price action has become
increasingly bullish in little time. But there are hurdles
also creating resistance not far above, coming with
Fibo retracement- & extension refs as well as the high
end of the early 2012 range in the 99.80-101.50 area.
Above those would increase a bullish score for the
euro while a counterbreak back under the yearly
average, now at 97.90 would take back what just has
been gained. Back under 96.51 would significantly
raise the downside risk and bring a large negative
score into the equation. 0
LIQUIDITY, EVENT RISKS, GLOBAL CYCLE Although
the risk for a break-up of the euro project remains, new
measures as the fiscal compact and just recently ECBs
Outright monetary transactions program (OMT)
suggest, the risk for a break-up has declined. From a
very negative -4 in May we today attach a -2 grade
related to the risk for a break-up in the score card.
Liquidity does work in a positive way for the euro but
since the global crisis is about the future of the euro-
project, liquidity can hardly be described as very
positive now. The global cycle is judged to be neutral
to the currency; the euro is one of the currencies that is
less prone to follow the global business cycle to any
significant degree.
13
Currency Strategy
Japanese yen JPY Weighted score: -0,6

JPY was projected to be the weakest currency in the Fundamentals
September 2012 Currency Strategy. We even added a
Carry
+0.5 grade as we thought the Scorecard painted a too
negative picture for the JPY. The currency has since Monetary policy
then depreciated far beyond our bearish forecasts as Flows
Japan is gearing-up for massive monetary and fiscal Valuation
stimulus. The country has good arguments for running Positioning
this policy on very poor economic outlook and a still
overvalued currency. Following some near-term Technicals
consolidation/profit-taking (on disappointment from Liquidity
the latest BOJ-meeting) we expect additional Event risk
depreciation. Global cycle
ECONOMIC FUNDAMENTALS Growth contracted -0,8 -0,6

E U R-0,4 -0,2 0,0positio
speculative 0,2 ns0,4 0,6 0,8
U S D /C A D
0.9%q/q in Q3 2012 and is expected to show a 12 5
1.35 0 E U R /U S D
consecutive (albeit) small decline in Q4. Trade frictions 10 0
1.30 0 75
with China are clearly putting its toll on exports and
50
1.25 0
the trade balance developments have clearly added to 25
the on-going JPY weakening trade (9 of the last 12 1.20 0
0
S peculative positions
months have shown a trade deficit) and there seems to 1.15 0 -2 5
04 05 06 07
be a more structural shift in the trade balance unlikely
to only be dependent on increasing commodity The lack of significant upside progress in
imports. The new liberal government under PM Abe EUR/USD makes the current substantial net
has announced an unprecedented drive to weaken the sub-1.29-area be revisited, speculative
the JPY and bring back inflation. These policies will longs will have to be reduced.
boost nominal growth but also weaken the
fundamentals additionally as debt/GDP is approaching
250%. 0
MONETARY POLICY The new government has made a

return to inflation and weaker JPY a very clear policy
objective. At the BOJ-meeting on Jan 22nd, the much
anticipated 2% inflation target was adopted. However,
although open-ended asset purchases were
introduced (JPY 13trn/month), the message failed to
meet elevated expectations as they commence only
after the current program is completed (Jan 2014). BOJ
is hence looking to buy time to evaluate current
monetary policy expansion program. The failure to
meet elevated expectations may strengthen the JPY
short-term. However over time open-ended purchases
contributes to a very negative score for the currency.
-2
FLOWS. The underlying developments in the Current
account are clearly negative for the JPY and give
evidence that the currency is (still) overvalued.
Although unlikely to produce an overall deficit soon (as
net investment income will continue to provide Japan
with a very sizable net inflows) the risk of moving
towards external capital dependence with rates below
1% and debt/GDP towards 250% will over time also
provide a substantial headwind for JPY. -1
14
Currency Strategy
Japanese yen SEBEER Long-term Fair value, JPY Index

150
VALUATION The rapid depreciation during Q4 2012
140
has moved JPY valuation into a more neutral territory:
our own SEBEER model still paints JPY among the most 130
expensive G10 currencies (together with CAD and 120
CHF). The deviation from long-term nominal trend 110
however is now actually signalling a substantial
100
undervaluation whilst the real effective exchange rate
90
trend is close to current spot level. Our best estimate
for JPY valuation is that the currency is still overvalued. 80
0 70
2000 2002 2004 2006 2008 2010 2012
POSITIONING The net JPY position among speculative
JPY Long-term Fair value
accounts is massively short the currency. In Dec 2012
it was the shortest since the end of the carry trade era
in 2007. However, since then the net short has been E U R speculative positio ns
U S D /C A D
somewhat normalized. For five consecutive weeks the 12 5
1.35 0 E U R /U S D
10 0
net short has decreased. The trend in positioning
1.30 0 75
changes is thus clearly for a stronger JPY (as short 50
1.25 0
positions are unwound) rendering a positive 25
1.20 0
positioning score. +4 0
TECHNICALS Losses have been accelerated through 04 05 06 07
the latter half of last year and into the beginning of
this. Pronounced bearish price action through refs EUR/USD makes the current substantial net
both at 168.90 and at 160.70, shows that heavy supply long speculative position a burden. Should
keeps hitting the market regardless a prevailing the sub-1.29-area be revisited, speculative
downside stretch. The 161.8% extension indicates that
something bigger likely is in the making and which is
probably so far is incomplete. But there is as said also a
Technical view: BOE JPY index
severe short-term overstretch to consider after such a
sharp drop, so a recoil as high as 168.90 cant be ruled
out before heading lower. -3
LIQUIDITY, EVENT RISK AND GLOBAL CYCLE

Liquidity is judged to be of no importance this time in
the Scorecard (0% weight). As regards event risks
there are large and significant risks providing both up-
and downside potential for JPY. The move lower over
the past few months have been induced by promises
and expectations on potentially very large monetary
and fiscal expansionary measured aimed at boosting
inflation / weaken the JPY. Clearly the upside risks to
the JPY are predominant should policy makers fail to
deliver on that promise.
15
Currency Strategy
GBP Weighted score: -0,7

British pound sterling
Fundamentals
Although GBP continues to receive very low grades
Carry
across the board, indicating the currency should be
among the weakest in the FX scorecard, it has proved Monetary policy
remarkably strong. Last year the Eurozone debt crisis Flows
probably generated GBP-positive flows as the GBP was Valuation
considered a safer alternative. Nevertheless to us the
Positioning
GBP remains too strong and should weaken.
Technicals
ECONOMIC FUNDAMENTALS Growth was probably
Liquidity
weak or even negative in the final quarter of 2012. This
year we however expect the British economy to Event risk
improve slowly although there are still several head Global cycle
winds holding back the economy. Unemployment
-0,8 -0,6 -0,4 -0,2 0,0 0,2 0,4 0,6 0,8
remains high and will probably rise even further as
productivity growth should improve. In addition E U R speculative positio ns
U S D /C A D
contraction from fiscal policy will continue as the 12 5
1.35 0 E U R /U S D
10 0
public sector not yet is nearly done with its
1.30 0 75
consolidation. These head winds are currently 50
1.25 0
weighing on household sentiment and spending. 25
However, house prices have stabilized and inflation is 1.20 0
0
likely to fall back in 2013. Despite large reforms the 1.15 0 -2 5
04 05 06 07
improvement of the public deficit goes slower than
expected pushing public debt beyond previous The lack of significant upside progress in
forecasts. Rating agencies currently hold a negative EUR/USD makes the current substantial net
outlook on the UK and a downgrade is not unlikely. the sub-1.29-area be revisited, speculative
The first decision is expected already in Q1. -1 longs will have to be reduced.
MONETARY POLICY After the BOE reached the GBP

375bn target by the end of November last year the
bank has stopped buying bonds. Instead the bank has
attached increased hope to the FLS-scheme to
improve the credit conditions and reduce costs of
credit. With growth recovering in Q3, after three
quarters with negative growth, and with job creation
being surprisingly resilient last year, there is no
immediate need to expand the programme further.
Only one member has repeatedly argued and voted for
further expansion. Therefore, near-term it appears
unlikely the BOE would change its current stance. In
addition several members appear increasingly
uncertain additional bond purchases would support
the British recovery. However we believe it is still too
early to fully discard the idea that the BOE could
expand its bond purchase programme later this year if
growth fails to recover in H1. -1
FLOWS Trade deficits and portfolio outflows continue
to generate GBP-negative flows. One would have
expected the weak domestic growth to reduce the
trade related deficits, but exports so far have been
equally or even more affected due to the Eurozone
crisis. Hence, so far there are virtually no signs that the
British economy has started to rebalance towards
external demand, rather the opposite as trade
generates close to record large deficits and portfolio
flows contribute negatively as well. -2
16
Currency Strategy
SEBEER Long-term Fair value, GBP Index

British pound sterling 150
VALUATION After a significant depreciation in 140
2007/08 pushing GBP towards clearly undervalued 130
levels, the combination of falling long-term fair value
120
and a rebound in the nominal GBP-index, have moved
the GBP towards its estimated long-term fair value 110
where it has remained quite stable for more than a 100
year. Hence, currently the GBP appears reasonably 90
valued according to SEBEER. This also fits with other 80
measures of valuation as the deviation from a long-
70
term average in nominal or real trade weighted indices.
2000 2002 2004 2006 2008 2010 2012
Based on valuation we therefore would not expect any
GBP Long-term Fair value
substantial changes for the GBP. 0
POSITIONING By the end of 2012 the positioning in E U R speculative positio ns
U S D /C A D
GBP was the longest since May 2011. However, since 12 5
1.35 0 E U R /U S D
then that excessive positioning has started to 10 0
1.30 0 75
normalize. Thus the score is -1 signifying a
50
continuation of speculators scaling down on the net 1.25 0
25
long positions. -1 1.20 0
0
TECHNICALS: A significant lower break materialized 04 05 06 07
below 83.10 during the week ending Jan11. Further
ongoing progress through an Equality point at 82.70 The lack of significant upside progress in
hosts the next objective somewhere below the 82- long speculative position a burden. Should
handle (81.75/81.50) fully in sight. A broader the sub-1.29-area be revisited, speculative
timeframe outlook is even more bearish, ultimately longs will have to be reduced.
targeting levels below the 2009 low of 73.30 then

with 77.50/76.40 as important hurdles to pass on the Technical view: BOE GBP index
way. Back over 84.30 would pull the rug under a
bearish case as it would strongly argue for a +84.70
move instead. -3
EVENT RISK, LIQUIDITY AND GLOBAL CYCLE
Traditionally changes in the sterling exchange rate has
been almost fully uncorrelated with changes in global
risk sentiment but lately there is actually a small
positive correlation. Nevertheless we do not think
changes in market risk appetite will be a major driver
for the GBP and the currency therefore should belong
among the currencies underperforming if global
sentiment continues to improve. Large financial
markets and tradition as a reserve currency still serve
the sterling with large capital flows putting the GBP
among the most liquid currencies in the world. As such
it tends to be almost unaffected when financial
markets focus on liquidity. This time we have attached
a -1 on event risk for the GBP reflecting the risks for
downgrades of the UKs top debt rating. The main
rating agencies today have a negative outlook for the
UK and the first downgrade could well happen already
in Q1 this probably weighing on the currency.
17
Currency Strategy
Canadian dollar CAD Weighted score: 0

Our measures continue to indicate that the Canadian Fundamentals
dollar probably is overvalued while the capital flow Carry
situation has deteriorated. These seem to be the Monetary policy
biggest threats against the currency long-term.
However, being one few G10-economies with ok Flows
fundamentals as a economic growth, a fairly small Valuation
public deficit and a firm demand from households, the Positioning
high valuation may not be an obstacle to the currency Technicals
near term. The current account deficit has been
Liquidity
balanced by portfolio inflows but these have
decreased, as there is less demand for safer Event risk
alternatives to major currencies. However, given Global cycle
Canadas close link to the US economy the flow
situation may improve as exports should pick up given -0,8 -0,6 -0,4 -0,2 0,0 0,2 0,4 0,6 0,8
when the US economy recovers. E U R speculative positio ns
U S D /C A D
12 5
ECONOMIC FUNDAMENTALS Economic activity was 1.35 0 E U R /U S D
10 0
weak in the third quarter. Household demand remains 1.30 0 75
a positive contributor to Canadian growth driven by 1.25 0
50
falling unemployment, currently the lowest since 1.20 0

25
0
before the financial crisis in 2008. However, residential S peculative positions
1.15 0 -2 5
mortgage credit growth has begun to moderate which 04 05 06 07
may lead to lower household demand going forward. If
so, other parts of the economy (mainly exports) have The lack of significant upside progress in
to increase or growth will slow. With its close links to long speculative position a burden. Should
the US economy (74% of exports) a US recovery would the sub-1.29-area be revisited, speculative
contribute positively although weak productivity
growth and an overvalued currency weigh on Canadas
competitiveness. Recent business surveys show a
slightly mixed picture with business sentiment
declining in Q4 below the historical average while
investment intentions indicate continued capital
spending. 0
MONETARY POLICY BOC has remained on hold since

Sep. 2010 keeping the policy rate at 1% to support
economic growth and prevent the currency from
getting too strong. In its latest MPR the BOC projected
inflation to increase towards the 2% target over the
next 12 months. The hawkish tone in the statement
from the April meeting has become more subdued
after growth has slowed while household credit
demand lately has shown signs of easing. BOC still has
a tightening bias but rate hikes should not be expected
in the near term. 0
FLOWS Weak competitiveness continues to generate

trade deficits. Foreign portfolio bond inflows have
partially been compensating this, but given the easing
of troubles in the Euro-zone such financial flows have
started to decline and this process will probably
continue in 2013. Thus the score has become lower
compared to the latest report. -2
18
Currency Strategy
SEBEER Long-term Fair value, CAD Index

Canadian dollar 150
VALUATION In trade weighted terms the Canadian 140
dollar appears substantially overvalued from a long-
term perspective. Our internal long-term fair value 130
model indicates the CAD currently is around 20% 120
overvalued against its trade weighted index and the
110
BIS real effective exchange rate gives a similar picture.
Hence, valuation remains a long-term caveat for the 100
CAD which eventually will weigh on the currency. The 90
strong currency has also contributed to Canadas
80
persistent current account deficits. However, short-
2000 2002 2004 2006 2008 2010 2012
term Canada is likely to continue to attract foreign
portfolio inflows and valuation is therefore unlikely to CAD Long-term Fair value
weaken the CAD near term. -2
U S D /C A D
POSITIONING The net long CAD positioning still 12 5
1.35 0 E U R /U S D
remaining saw a rapid increase in H2 2012 as general 10 0
1.30 0 75
risk appetite improved and BOC was sounding more
50
hawkish than most G10 central banks. The most 1.25 0
25
extreme positioning has partly normalized and recent 1.20 0
0
positioning changes have been a reduction of the net 1.15 0 S peculative positions -2 5
long position which is a factor pointing towards more 04 05 06 07
CAD weakness going forward. -1 The lack of significant upside progress in

TECHNICALS The index has for Q3-Q412 and so far long speculative position a burden. Should
this year held above a positively sloped yearly average. the sub-1.29-area be revisited, speculative
This renders a positive grade for the loonie, but the longs will have to be reduced.
2011-2013 advance still looks correctional compared

to the paced 2011 drop prior to this correctional Technical view: BOE CAD index
looking move higher. A 116-118 high ought to be
traced out but later with an increased risk for a sharp
setback. +2
EVENT RISK, LIQUIDITY AND GLOBAL CYCLE
Historically the Canadian dollar has correlated
positively with general risk appetite and the
performance of the US equity market, appreciating
with improving risk appetite. As risk appetite is likely to
continue to improve over the next 3-6 months this
should support the CAD. There are now specific events
related to Canada but events having an impact on the
US economy may also impact the Canadian situation.
However, we have not included any currency specific
negative event risk to the CAD.
19
Currency Strategy
AUD Weighted score: 0,2

Australian dollar Fundamentals
Carry
With its rich valuation we are more cautious on the
outlook for the AUD although the currency receives a Monetary policy
score above the average for the currencies included in Flows
the scorecard. However, the RBA has raised concern Valuation
on the impact of a strong currency and a significant Positioning
appreciation from current levels would probably Technicals
render a response from the central bank capping the
Liquidity
upside potential.
Event risk
ECONOMIC FUNDAMENTALS With global demand for Global cycle
commodities growing more slowly mining related
investments probably have peaked. Hence, going -0,8 -0,6 -0,4 -0,2 0,0 0,2 0,4 0,6 0,8
forward the contribution from commodity related
investments would gradually have to be replaced by E U R speculative positio ns
stronger contributions from other sectors of the U S D /C A D
12 5
1.35 0 E U R /U S D
economy such as household consumption and exports 10 0
outside the mining sector. However, currently the 1.30 0 75
50
labour market gives little support to households as 1.25 0
25
unemployment slowly grinds higher and employment 1.20 0
0
expansion has stalled since mid-2012. On the other 1.15 0 S peculative positions -2 5
hand lower rates have helped the housing market to 04 05 06 07
recover and house prices have started to rise again. The lack of significant upside progress in
With its large exposure towards the commodity sector EUR/USD makes the current substantial net
Australia would be one of the strongest beneficiaries if long speculative position a burden. Should
global growth picks up again. 0 longs will have to be reduced.
MONETARY POLICY In December the central bank

decided to reduce the cash rate by 0.25% to 3.0% as
growth in labour costs has slowed substantially and
the labour market has softened. From previously being
relaxed with the strong currency, the RBA has raised
some concerns regarding this issue with lower
commodity prices which will weigh on terms-of-trade
going forward. Current market pricing indicates
expectations for approximately 1-2 additional rate cuts
during the next 6 months. Although the probability for
further monetary policy easing has declined lately after
signs that the Chinese recovery is gaining traction and
the Eurozone crisis has eased, we would not fully rule
out the possibility for additional cuts, especially if the
AUD would appreciate towards previous highs around
1.10 against the USD. -1
FLOWS With its strong fundamentals Australia has
been a popular destination for safe haven flows. All
together these inflows have more than fully
compensated for a persistent current account deficit
largely related to substantial net investment outflows.
With risks related to the global economy currently
easing flight-to-quality related flows, however, are
likely to be less important going forward. On the other
hand the AUD can offer a positive carry which could
attract additional capital inflows. Nonetheless we
expect capital flows to be less of a positive factor for
the AUD going forward. 0
20
Currency Strategy
SEBEER Long-term Fair value, AUD Index

150
Australian dollar 140
VALUATION Being one of few currencies with strong
fundamentals also offering some carry the aussie has 130
attracted large capital inflows in the ongoing process 120
of rebalancing out of fundamentally weak currencies.
110
In addition high commodity prices have attracted
foreign investment inflows. Altogether this has pushed 100
the AUD to a stretched valuation compared to most 90
other currencies. As long as the strong currency was
80
matched by increased commodity prices the high
2000 2002 2004 2006 2008 2010 2012
valuation was less of a problem. However, lower
commodity prices have increased focus on valuation AUD Long-term Fair value
and which limits the upside potential. -3
POSITIONING The net long positioning in the AUD has E U R speculative positio ns
U S D /C A D
gone from being very small in the beginning of the 12 5
1.35 0 E U R /U S D
summer 2012 to become excessively. A normalization 10 0
1.30 0 75
has already started and positioning has the last couple
50
of weeks been fairly unchanged which is reflected in 1.25 0
25
the neutral positioning score. 0 1.20 0
0
TECHNICALS The aussie index was allowed to press 04 05 06 07
into a fresh all-time high during the week ending Jan11
this year. This shows demand and buyers initiative The lack of significant upside progress in
despite elevated levels. In index terms it looks like an long speculative position a burden. Should
extension into the 114-115 is possible. Support likely the sub-1.29-area be revisited, speculative
around prior tops at 111.00-110.70. +2
EVENT RISK, LIQUIDITY AND GLOBAL CYCLE With its Technical view: BOE AUD INDEX
massive exposure towards the commodity sector the
AUD has traditionally been the prime example of a pro-
cyclical currency tracking risk appetite closely.
However, lately this relationship has been less clear
and as the correlation broke down. Considering the
last two months however, the relationship has, been
re-established and the AUD appears to track changes
in global risk appetite fairly closely again. Currently
there is no major event risk related to the AUD
specifically.
21
Currency Strategy
New Zealand dollar

The NZ economy is muddling through underpinned by NZD Weighted score: 0,2
a less challenging international environment (US Fundamentals
passing the 1st cliff, reduced EZ stress & Chinese
Carry
recovery), rising dairy prices, expectations of an
improving construction sector (not only Canterbury Monetary policy
repairs) but also increased residential housing activity. Flows
The strong NZD on the other hand is a real headwind Valuation
to the NZ economy making exports deteriorating
Positioning
pressuring domestic production. The new RBNZ
governor Mr Wheeler however sounded a tad more Technicals
hawkish at the banks latest OCR meeting in December Liquidity
making a cut less likely. Continued foreign demand for Event risk
NZ bonds remains a positive factor. Hence we expect
Global cycle
to see the NZD remaining at elevated levels.
-0,8 -0,6
E U R -0,4 -0,2 0,0positio
speculative 0,2 ns0,4 0,6 0,8
ECONOMIC FUNDAMENTALS Estimated GDP growth U S D /C A D
12 5
for 2013 was adjusted lower during Q4 (from 2.4% to 1.35 0 E U R /U S D
10 0
2.2%) but the economy is still expected to sputter 1.30 0 75
along (RBNZ forecast). The economy remains fragile 1.25 0
50
due to still persisting international challenges, 1.20 0

25
0
reluctant domestic consumers, high household debt S peculative positions
1.15 0 -2 5
levels, fiscal consolidation, rising unemployment and 04 05 06 07
an elevated currency. Higher dairy prices have mainly
been offset by the stronger NZD. The surge in 2012 The lack of significant upside progress in
residential housing activity (sales up 24% y/y and long speculative position a burden. Should
prices up 7% y/y) is however expected to further the sub-1.29-area be revisited, speculative
improve the construction sector (on top of the already
ongoing Canterbury reconstruction). +1
MONETARY POLICY RBNZ has remained on hold at

2.50% since the spring of 2011. With persisting global
risks, low inflation falling towards or below the low end
of the 1 3% comfort zone (RBNZ estimate for 2013 at
1.2%), rising unemployment and a strong currency, it
could be argued that there is room for the bank to
reassess its current stance. The Bank however remains
firm with its view that it is appropriate for the OCR to
remain at 2.5 percent. In fact in the latest MPS the
bank mentions future stronger domestic demand,
construction sector pick up and falling excess capacity
during 2013 as reasons to expect inflation returning to
the 2% mid area by the end of 2013. We consider the
latest policy assessment a tad more hawkish than the
preceding one, hence making a cut less likely and,
should the development turn slightly more positive, a
25bps hike late 2013/early 2014 is a viable option.
0
FLOWS The latest (Jan 10) data from statistics New
Zealand showed a marked decline of exported goods (-
2.4% yoy). The trend for exports has been declining in
recent months whereas imports remain basically flat.
Foreign holdings of NZ government securities have
continued its slow but steady increase (Nov 2012
estimate 61.1%). The CA deficit is deteriorating,
expected at -4.9% 2013 and so is the terms of trade.
-2
22
Currency Strategy
SEBEER Long-term Fair value, NZD Index

New Zealand dollar 120
VALUATION A still persisting diversification trend in 115
the FX markets has continued to favour the NZD as 110
being one of the fundamentally stronger currencies 105
100
(growth and no quantitative measures), with a high
95
rating (AA+). Accordingly the inflow to NZ government 90
securities continues supporting the financing of a 85
widening CA deficit. The OCR at 2.5% also helps 80
attracting inflows in a yield starving environment. The 75
result has become an even further overvalued 70
currency, with the NZD BOE index adding another five 2000 2002 2004 2006 2008 2010 2012
index units since the September Currency Strategy. NZD Long-term Fair value
-3
POSITIONING The NZD positioning has gone from a
net short position at the beginning of the summer E U R speculative positio ns
U S D /C A D
2012 to a relatively large net long positioning. Despite 12 5
1.35 0 E U R /U S D
10 0
the correction in December the market has quickly
1.30 0 75
rebuilt a long position in close proximity to the 50
1.25 0
2011/2012 maximum long NZD positions, thus the 25
1.20 0
positive score. +2 0
TECHNICALS The market has since the Sept CS both 04 05 06 07
broken up from the bullish triangle and printed a fresh The lack of significant upside progress in
cycle high. The price action argues for more strength EUR/USD makes the current substantial net
during the months to come with an estimated top line long speculative position a burden. Should
at 118.70 and the 2007 peak at 121 being two obvious longs will have to be reduced.
points of attraction. Thereafter a more profound Technical view: BOE NZD index
reaction expected to occur, bringing the NZD back to Price
its yearly average. +1
110
LIQUIDITY, EVENT RISK AND GLOBAL CYCLE
Turnover in the foreign exchange markets have 100
decreased during 2012 (measured as the turnover on
electronic trading platforms), decreasing liquidity in
90
the marketplace hence increasing the magnitude of
event driven moves. On the other hand the plentiful
liquidity offered by major CBs continues to seek safe 80
havens and particular those offering positive returns. 2007 2008 2009 2010 2011 2012 2013
In NZ this can be seen by a still persisting appetite for 2000 2010
NZ government bonds and bills. The large portion of
the government (in excess of 60%) debt held by
foreign accounts of course impose a future risk for the
NZD should monetary policy elsewhere starting to be
less accommodative (as a result of a better global
economic outlook). The CoT (commodity of traders)
report shows that the market again is adding on to a
long position albeit not yet at the record long position
registered in December. Rising prices and a growing
long position makes the advance looking well
underpinned.
23
Currency Strategy
CHF Weighted score: -0,8

Swiss franc
Fundamentals
Finally, the Swiss franc has started to weaken related
Carry
to declining European market risk premium. The relief
rally in the euro has erased safe-haven flows and put Monetary policy
downward pressure on the Swiss franc. But downside Flows
risks to the economy dominate as it is still far too early Valuation
to give an all clear signal on the European debt crisis.
Positioning
Therefore the SNB will keep its monetary policy
strategy unchanged. The minimum EUR/CHF 1.20 Technicals
exchange rate will remain in place throughout 2013. Liquidity
Both a balanced budget and the huge surplus in the Event risk
current account are supportive to the Swiss franc.
Global cycle
ECONOMIC FUNDAMENTALS In Q3 2012 the Swiss
-0,8 -0,6 -0,4 -0,2 0,0 0,2 0,4 0,6 0,8
economy grew by 0.6% q/q, after contracting by 0.1% E U R speculative positio ns
q/q in Q2. Solid growth in private and public U S D /C A D
12 5
1.35 0 E U R /U S D
consumption was the key driver. In the last months of 10 0
2012 the KOF economic leading indicator deteriorated, 1.30 0 75
50
falling to 1.28 in December which is well below the 1.25 0
25
yearly high of 1.68 reached in September. This point to 1.20 0
0
slowing GDP growth during Q4 2012/Q1 2013. For 1.15 0 S peculative positions -2 5
2013 as a whole, the Swiss government estimates GDP 04 05 06 07
to grow by 1.3%. The public budget is expected to The lack of significant upside progress in
show a surplus of 0.5% of GDP in 2013, cutting the EUR/USD makes the current substantial net
debt level to 45.5% of GDP. Fundamentals remain long speculative position a burden. Should
neutral/slightly favourable for the Swiss franc. 0 longs will have to be reduced.
MONETARY POLICY In its December meeting the SNB

decided to keep its monetary policy strategy
unchanged. The conditional outlook for inflation
suggests that the general price level will continue to
decline throughout H1 2013 and to rise only gradually
thereafter. Hence, risks of deflation persist in an
environment of moderate growth of 1.0% to 1.5% this
year. The three month LIBOR target range will stay at
0.00% to 0.25% in coming quarters. The bank will
continue to keep the minimum EUR/CHF 1.20
exchange rate unchanged throughout 2013. The SNB
regards the CHF as still highly valued and sees an
appreciation of the currency as a threat to price
stability and economic performance. Lifting the
minimum exchange rate is not a policy option. 0
FLOWS At the end of 2012 SNBs foreign currency
reserves totalled CHF 427.2bn, slightly down from CHF
429.5bn at the end of Sep 2012. Reversing save haven
flows due to the euros rally in recent weeks eased
pressure on the SNB to intervene in the currency
markets. Regarding the current account, Switzerland
posted a surplus of CHF 58.4bn in the first three
quarters of 2012, a significant improvement compared
with the surplus of CHF 34bn in the same period 2011,
a supportive factor fort he currency. 0
24
Currency Strategy
SEBEER Long-term Fair value, CHF Index

Swiss franc 150
VALUATION The Swiss franc is one of the most 140
overvalued G10 currency according to our three
different valuation methods. SEBEER has a fair value 130
estimate of USD/CHF and EUR/CHF at 1.12 and 1.44 120
respectively. The deviations from long-term averages
110
are also very substantial both in nominal and in real
terms. The caveat to this consensus view of franc 100
overvaluation is that Switzerland continues to 90
generate massive current account surpluses, year after
80
year. However as the Eurozone crisis has eased the
2000 2002 2004 2006 2008 2010 2012
appreciation pressure on the CHF has also moderated
CHF Long-term Fair value
and recently weakening the currency. -3
POSITIONING The CHF speculative position is net long E U R speculative positio ns
U S D /C A D
which is the first time since mid 2011. However, in a 12 5
1.35 0 E U R /U S D
two year perspective the level is far from excessive. 10 0
1.30 0 75
The change in positioning in recent weeks has lately
50
been a slight reduction of the net long position which 1.25 0
25
is reflected in the score. -1 1.20 0
0
TECHNICALS The swissy was on a positive footing 04 05 06 07
against its basket since a low early Q3 last year, though
the move higher came to an abrupt end after new year The lack of significant upside progress in
with a sharp drop following the impulsive rise off the long speculative position a burden. Should
SNB EUR/CHF 1.20 floor. The overall CHF outlook has the sub-1.29-area be revisited, speculative
lost its small positive grade for a more neutral stance longs will have to be reduced.
while inside 141-144. 0

Technical view: BOE CHF index
LIQUIDITY, EVENT RISKS AND GLOBAL CYCLE The
Swiss franc remains a prime destination for capital as
long as there is no definite end to the debt crisis in
Europe. Fundamental data are as sound as ever,
underscoring the role of the CHF as a safe haven. The
SNB will maintain its monetary strategy and it will
continue to defend the EUR/CHF minimum exchange
rate of 1.20 and it is highly unlikely that the floor will be
raised anytime soon.
25
Currency Strategy
Swedish krona SEK Weighted score: 0,2

SEK has been weaker than what we anticipated as the Fundamentals
economy has slowed rapidly and some safe-haven Carry
flows likely left Swedish asset markets. Currently the Monetary policy
krona is facing headwind from still weak Swedish
Flows
export markets and improving euro outlook. However
more traditionally positive drivers for SEK such as risk Valuation
appetite and a gradually improving global economic Positioning
outlook should strengthen the currency modestly in Technicals
the coming 6 months. The greatest risk to this call is Liquidity
ironically rapidly increasing investor europhoria
Event risk
which may bring profit taking on low-yielding Swedish
assets leaving for EUR-denominated markets. Global cycle
ECONOMIC FUNDAMENTALS The growth outlook -0,8 -0,6 -0,4 -0,2 0,0 0,2 0,4 0,6 0,8
worsened dramatically during fall and some leading
indicators are not much above the historical lows set U S D /C A D
12 5
four years ago. Q4 2012 will mark the trough in the 1.35 0 E U R /U S D
10 0
business cycle, SEB expects -0.5% q/q with a small 1.30 0 75
improvement in Q1 2013 of 0.2% q/q. The recovery 1.25 0
50
will be slow and unemployment should rise towards 1.20 0

25
0
8.5% mid-13. The consumer outlook is decent despite S peculative positions
1.15 0 -2 5
rising joblessness and 2013 will be a crucial year for 04 05 06 07
assessing whether the housing market will correct
record high prices. We expect a moderation of 5-10% The lack of significant upside progress in
still but the effect on the consumer spending will likely long speculative position a burden. Should
be marginal. GDP will expand 1.3% in 2013. Strong the sub-1.29-area be revisited, speculative
fundamentals may be a handicap should markets trade
less on flight to quality. 0
MONETARY POLICY Riksbank has conducted

monetary policy with a relatively transparent easing
bias (cuts at every second meeting during H2 2012).
The market is adequately pricing the risk for a final rate
cut as inflation will be sufficiently below target when
unemployment continues higher. Nevertheless, the
fixed income trade going forward is to position for
higher rates 2014/15. Although obviously not a carry
currency, monetary policy will not be a negative for
SEK during 2013. But, as tightening is a story for 2014
at the earliest, we expect Riksbank to be a neutral
factor for SEK. 0
FLOWS The external balance remains SEK positive as

Sweden continues to show a Current account surplus
of 6-8%/GDP. However, the trade balance in Q3 2012
weakened as exports to EMU collapsed 10% compared
to Q3 2011. Still total trade balance for 2012 is likely to
land above SEK 200bn driven by the net surplus in the
services industry. Net portfolio flows are notoriously
volatile but generated a positive SEK 97bn inflow in Q3
2012. Net investment income also resulted in a SEK
25bn surplus. As regards portfolio flows it remains to
be seen in official statistics whether foreign investors
are less eager buyers of SEK-denominated assets (their
ownership rate has decreased from record-high levels
E one
mid-2012). We have lowered the grade for flows as the
search for quality may decline further. -1
26
Currency Strategy
SEBEER Long-term Fair value, SEK Index

Swedish krona 150
VALUATION In trade-weighted terms the SEK is 140
currently not far from our estimated long-term fair 130
value. We have raised the importance of valuation in
120
the FX scorecard and although our model is neutral for
SEK, consensus amongst foreign banks/investors 110
seems to suggest SEK is currently overvalued -> could 100
be a risk for SEK in addition to profit-taking on safe- 90
haven trades. However: when we look at the 80
underlying data development for the SEBEER model,
70
the very low inflation outcome in Sweden 2012/2013
2000 2002 2004 2006 2008 2010 2012
will again move SEK valuation higher: SEBEER for
EUR/SEK is likely to land again at 8.30-8.50 which is SEK Long-term Fair value
also still the long-term level we expect will trade.
Looking only at the external surplus, SEK is E U R speculative positio ns
U S D /C A D
12 5
substantially undervalued as manifested by the 6-
1.35 0 E U R /U S D
10 0
8%/GDP Current account surplus. 0 1.30 0 75
50
POSITIONING The proxy for speculative positioning in 1.25 0
25
the SEK indicates that speculators are very long SEK. 1.20 0
0
The most recent changes in the proxy position indicate 1.15 0 S peculative positions -2 5
a reduction of the long net position, normalizing the 04 05 06 07
quite excessive positioning. Probably this The lack of significant upside progress in
normalization will continue for some time adding EUR/USD makes the current substantial net
downside pressure on the SEK which is reflected in a long speculative position a burden. Should
slightly negative score. -1 longs will have to be reduced.
TECHNICALS The krona was late last year saved from
breaking above the still (index) negatively sloped Technical view: TCW index
yearly average and during the turn of the year the
krona strengthened notably. The yearend gap is now
closed amid a correctively looking advance higher. If
SEK support around 118.60-119.00 gives way the
falling yearly average, now at 120.60, comes back in
focus again. The important late Sep12 low of 117.30
must be broken to improve the chance to see the
summer low of 115.25 traded again. +2
LIQUIDITY, EVENT RISK AND GLOBAL CYCLE.

Liquidity is not judged to be of importance in H1 2013.
We currently fail to identify a meaningful event risk for
SEK, the biggest domestic risk is correcting house
prices SEB forecast a decline of 5-10% but that
should have very limited macroeconomic effects. A
significant price decline (very unlikely as residential
investments are structurally at too low levels as
percentage of GDP) could bring closure of the large
foreign ownership of covered bonds. Global cycle is
the currency correlation to global risk appetite and we
expect a general sentiment improvement which is SEK
positive over the medium-term. Despite a repricing
of SEK as a less pro-cyclical currency, the high export
dependence will ensure a positive correlation to risk
appetite going forward.
27
Currency Strategy
Norwegian krone NOK Weighted score: 0,4

In the previous Currency Strategy the NOK was the Fundamentals
outstanding best ranked currency in our scorecard. Carry
Although our expected EUR/NOK test of 7.00 didnt
Monetary policy
materialize the import-weighted NOK has gained some
2% printing new all-time-lows in the I44 index and Flows
outperformed all G10 currencies. Solid fundamentals Valuation

will continue to attract investors to increase exposure Positioning
to Norwegian assets. However, as diversification flows Technicals
will be less of a driver for currencies we expect only Liquidity
modest import-weighted NOK gains until market
Event risk
revises its cautious rate expectations which will trigger
EUR/NOK to again flirt with all-time-lows around 7.20. Global cycle
-0,8 -0,6 -0,4 -0,2 0,0 0,2 0,4 0,6 0,8

ECONOMIC FUNDAMENTALS Fundamentals remain
strong with an expected budget surplus of 12% and E U R speculative positio ns
U S D /C A D
12 5
trend-growth this year (close to 3%). However, the
1.35 0 E U R /U S D
10 0
growth outlook has been revised a tad lower following 1.30 0 75
weakness in recent domestic data. Momentum in 50
1.25 0
manufacturing outside the oil sector has slowed 25
1.20 0
reflecting the slide in business indicators. Private con- 0
sumption also downshifted late last year contradicting
04 05 06 07
strong income growth and labour markets. The NOK
has however taken little notice of downside data The lack of significant upside progress in
surprises and we expect growth momentum to pick-up EUR/USD makes the current substantial net
again during Q1. However, as long as data doesnt the sub-1.29-area be revisited, speculative
triggering expectations of rate hikes the relatively longs will have to be reduced.
strong economic outlook is unlikely to boost the
currency in a meaningful way in the near term. 0
MONETARY POLICY Expectations for rate hikes are

Market expectations on Norges Bank
modest despite a closed output gap and troublesome
3.50 3.50
high private debt, reflecting Norges Banks focus on
global rates and NOK. Near term developments will 3.00 3.00
only enhance the banks tough dilemma and little
suggests the bank will change focus in the upcoming 2.50 2.50
March MPR; NOK is overshooting the Q1 forecast by 2.00 2.00
~1%, domestic demand is temporarily weak and
inflation is still not showing any clear sign of trending 1.50 1.50
higher. The NOK will remain strong but driven by
1.00 1.00
factors beyond the banks control. Rate spreads rather
than NOK should therefore become a more important 12/12 06/13 12/13 05/14 11/14 05/15 11/15
trigger for rate hikes. With rising risk appetite and Norges Bank Oct12 rate path Implied market pricing
cautiously higher rates abroad we expect the bank to
hike rates during this autumn at the latest. Market
discounts nothing until mid-2014 but we expect no re-
pricing of expectations until summer. 0
FLOWS Foreign investors are expected to increase

long-term exposure to Norwegian financial assets. We
see a 15-20% upside potential on Oslo Stock Exchange
for 2013 with the foreign ownership rate rising to
~38% after having hovering around 36% over the past
year. Demand for NOK-denominated bonds has picked
up helping to put a floor on the NOK. Norges Banks FX
purchases will be manageable with an expected
average of NOK 500m/day in 2013. +1
28
Currency Strategy
SEBEER Long-term Fair value, NOK Index

Norwegian krone 150
140
VALUATION Various corporations argue that the
130
Norwegian currency is overvalued and trading at very
rich levels. Measured as the real effective exchange 120
rate the NOK is indeed stretched from a valuation 110
perspective. Considering our long-term fair-value 100
model the NOK currently appears just below its long
90
term fair value. Hence, the currency is attractive
80
compared to most other fundamentally strong
commodity currencies such as NZD, AUD and CAD. 70
-1 2000 2002 2004 2006 2008 2010 2012
NOK Long-term Fair value
POSITIONING The speculative proxy for NOK
positioning indicates the market is fairly long the NOK.
The most recent changes have been towards E U R speculative positio ns
U S D /C A D
normalization. A continued reduction in the long 12 5
1.35 0 E U R /U S D
positioning could add some downside pressure on the 10 0
1.30 0 75
currency, which is reflected in the slightly negative
50
score. -1 1.25 0
25
1.20 0
0
TECHNICALS The krone remains on its grinding 1.15 0 S peculative positions -2 5
strengthening path and even though any attempt to 04 05 06 07
conduct a short-term wave count is difficult, the move
anyway looks like an extended wedge formation. The EUR/USD makes the current substantial net
wedge is ultimately a trend ending structure, but more long speculative position a burden. Should
than NOK bearish price action of late is needed to call the sub-1.29-area be revisited, speculative
for a more lasting index low in place. There was a
stretch created by the sheer distance to the yearly Technical view: NOK Index (I44)
average but the market is on the way to neutralize this
and in the meantime this reduces a technical score a
notch. Over 86.75\87.15 would further dent the
current positive grade. +2
LIQUIDITY, EVENT RISK AND GLOBAL CYCLE The

krone has again become positively correlated to risk
appetite (graph to the right). The NOK is thus in a good
position to benefit from gradual rise in risk appetite
while at the same time being favour from strong
fundamentals in times of weaker sentiment driven by
intensified political risks in the euro zone. Liquidity
remains a challenge but a less stretched positioning in
the NOK makes it less of a headwind at the moment.
We see no clear domestic event risks in the coming 6
months. Most uncertainty is currently related to
Norges Bank and the rate outlook. FX interventions to
weaken the NOK are highly unlikely and neither do we
believe in rate cuts as it would push real rates to
negative when the economy is operating at full
capacity. Such action wouldnt be credible and only
very temporarily hurt the krone.
eric
29
Currency Strategy
Danish krone DKK Weighted score: -0,2

Fundamentals
The DKK has depreciated vs. EUR in the second half of
2012 to around the parity of the peg. The negative Carry
deposit rate (in effect since July) has had a marked Monetary policy
effect on the currency. Another factor has been the Flows
easing of Eurozone tensions affecting portfolio flows.
Valuation
ECONOMIC FUNDAMENTALS Growth disappointed in Positioning
2012 turning negative as public spending lagged Technicals
budgets and imports outpaced exports. We expect
Liquidity
growth to pick up to 0.7% this year on the back of the
gradual global recovery. The fundamental problem in Event risk
the Danish economy is the aftermath of the private Global cycle
debt accumulation during the housing bubble. The
-0,8 -0,6 -0,4 -0,2 0,0 0,2 0,4 0,6 0,8
bust has left consumers stretched and revealed
pockets of weakness among banks. On the other hand, E U R speculative positio ns
U S D /C A D
12 5
Denmark is net creditor vs. the world and the net
1.35 0 E U R /U S D
10 0
wealth of Danish households is respectable in an 1.30 0 75
international comparison. Public debt is low with the 50
1.25 0
gross number of 48% to GDP including pre-funding 25
1.20 0
(cash) to the equivalent of 12% of GDP. Hence, the 0
fundamentals look very strong compared to most
04 05 06 07
Western peers with current growth less so. 0
MONETARY POLICY EUR/DKK is allowed to fluctuate EUR/USD makes the current substantial net
by +/- 2.25% around its central parity (7.46038). In the sub-1.29-area be revisited, speculative
practice DNB has maintained a much tighter range longs will have to be reduced.
from around 7.465 to around 7.425. Last summer DNB
intervened heavily selling DKK and reduced the
interest rate spread towards the bottom of this range.
EUR/DKK has since risen and for the last four months
the intervention has been reversed to support DKK.
The pace picked up in December, but the amounts are
small suggesting that an interest rate hike is not
imminent. A continued fall in Eurozone tensions would
maintain the upward pressure and eventually lead to
an increase in the deposit rate (which is the de-facto
policy rate given large deposits and few loans at the
central bank) to -10bp in the first half of the year. If
flows escalate it could go to zero again (closing the
negative spread to ECB). DNB has been less aggressive
than we expected letting EUR/DKK drift over the highs
from 2012. We expect 7.465 to remain the top of the
operational range, but there is a possibility that DNB
will introduce a new operational range with a higher
top given the structural downward pressure. +1
FLOWS The current account set a new record in June and

remains at an elevated level. The trade balance has come
down as imports outpaced exports, but net exports
should rise again this year. November saw significant
foreign bond buying by domestic investors suggesting
that recent DKK weakness was related to portfolio flows
on the back of lower Eurozone uncertainty. The foreign
purchases of Danish bonds also picked up, but not to the
same extent. Given the main scenario of further progress
E one
in the Eurozone these portfolio trends are likely to
continue. -2
30
Currency Strategy
Danish krone
VALUATION According to nominal valuation DKK is
slightly undervalued with the opposite conclusion
coming from real effective DKK (the two measures
used in the ranking). However, the chronic trade and
current account surplus suggests that DKK is
undervalued and that part of the conclusion from the
real effective DKK is due to measurement problems
with productivity and relative import and export prices
(Danish exports have had larger price increases than
imports). 0
POSITIONING With its narrow band to the euro
positioning for DKK is the same as for the euro. -1
TECHNICALS For purposes in the Currency Strategy Technical view:EEUR/DKK
U R speculative positio ns
U S D /C A D
context the krone gets a grading equivalent to the 12 5
1.35 0 E U R /U S D
10 0
euro, but in the EUR/DKK cross DKK sellers currently 1.30 0 75
hold an upper hand with price action pointing towards 50
1.25 0
a test of 2008 & 2005 tops at 7.4650 7.4700. So if 25
1.20 0
anything the krone gets a notch weaker grade than 0
what the euro scores at current levels, without better
04 05 06 07
indications that those tops wont be tested. 0
LIQUIDITY, EVENT RISK AND GLOBAL CYCLE EUR/USD makes the current substantial net
DKK is a less liquid market while the global cycle is long speculative position a burden. Should
likely to be neutral to DKK (same score as EUR). In later longs will have to be reduced.
years EUR/DKK has been negatively correlated to
Eurozone uncertainty. If the expected improvement
does not materialize or specific events cause a
negative dynamic in the Eurozone to resurface, this is
Central bank FX interventions
likely to put downward pressure on EUR/DKK as local FX purchases (DKK bn., monthly) Monthly
investors reduce investments abroad and foreign 40
7.47
purchases of Danish assets pick up. On the other hand, 30
20
if the negative spiral of higher unemployment and 10 7.46
falling housing prices picked up traction it could lead 0
7.45
to foreign investors repatriating investments putting -10
upward pressure on EUR/DKK. -20

7.44
-30
On February 1st Lars Rohde takes over from Nils -40 7.43
-50
Bernstein as chairman of the board at the central bank. -60 7.42
Rohde was CEO at ATP, the large semi-public Danish jan-99 jan-01 jan-03 jan-05 jan-07 jan-09 jan-11
pension fund, and has been outspoken in the public Interventions EUR/DKK (right)
Source: Danmarks Nationalbank and Bloomberg
debate in the past. In our view, Mr Rohde might be

more explicit than his predecessor about the
inconsistency of having a chronic current account
surplus as well as a currency peg. This could lead to
the central bank leaning in a more growth-friendly
direction in the public debate. In terms of monetary
policy, the change is unlikely to make a difference with
policy being as mechanical as before. There is the off
chance of the new chairman setting deeper monetary
policy changes in motion.
31
Currency Strategy
Russian rouble RUB Weighted score: 0.4

Growth slowed sharply last year but is set to recover Fundamentals
during 2013 and will be among the strongest in the Carry
region. High and stable oil prices will support robust
Monetary policy
public finances and capital flows. Meanwhile, interest
rates are attractive and with inflation likely to rise near Flows
term, the central bank is closer to another hike than to Valuation
a cut. The transition to inflation targeting by 2015 Positioning
implies a need to build credibility for the central bank.
Technicals
FX interventions may slow the pace but not prevent
the trend of rouble appreciation ahead. Liquidity
Event risk
ECONOMIC FUNDAMENTALS Public finances are Global cycle
strong. Transparency and stability will improve if the
new fiscal rule is applied. GDP growth fell from 4.9% in -0.8 -0.6 -0.4 -0.2 0.0 0.2 0.4 0.6 0.8
Q1 2012 to 2.9% in Q3 and probably further during Q4.
Investments, in particular, faded while rising CPI has E U R speculative positio ns
U S D /C A D
cut real wage growth from around 11% in H1 to a still 12 5
1.35 0 E U R /U S D
high 7% in Nov. Still, the growth outlook is good in a 10 0
1.30 0 75
regional comparison. We expect a recovery during
50
1.25 0
2013 lifting full year GDP by 3.4% in real terms, similar 25
to the 3.5% expected for 2012. In 2014, we expect 1.20 0
0
4.0% growth. The impact on disposable income from 1.15 0 -2 5
04 05 06 07
inflation will reverse in H2 supporting private consum-
ption. Credit growth will ease but remain strong. Fiscal The lack of significant upside progress in
policy will be less supportive while private investments EUR/USD makes the current substantial net
should benefit from an improved global cycle, liquid the sub-1.29-area be revisited, speculative
banks and reduced political risks. Some reform longs will have to be reduced.
progress has been made. Advances on privatisation,
pension reform and anti-corruption would come as a
positive surprise to both media, and the market. +2
MONETARY POLICY CPI bounced from a record low

3.6% in May to 6.6% in December and may rise further
near term due to excise duties on alcohol and tobacco
and adverse base effects. Base effect will support
disinflation in H2 2013 but the CPI targets (5-6% in
2013 and 4-5% in 2014) are at risk. This is challenging
given plans to adopt a pure inflation target by 2015.
Credibility in forming inflation expectations is crucial
as ever. Meanwhile, we expect growth to bottom
currently at 2% y/y and the Government openly argues
for a softer monetary policy stance. We expect rates on
hold with upside risks near term and downside risks in
H2 2013. Carry in the RUB is excellent. This month,
interventions have resumed to prevent a too fast RUB
appreciation but not to stop it, we think. A further
widening of the fluctuation band (31.65-38.65 vs. the
basket) by 1 rouble is likely in H1 2013. -1
FLOWS. With Brent oil expected at USD 107.5 p/b in

2013, the C/A will remain in a healthy surplus. Capital
outflows fell already in Q4 2012 as political risks eased
and sentiment improved. This will continue in 2013
leading to RUB supportive capital flows. +2
32
Currency Strategy
Russian rouble
VALUATION Although both the nominal rouble
effective exchange rate and the rouble vs. the USD are
far below their heights, the real effective exchange rate
(REER) is trading just shy of the peaks in July 2011 and
March 2012. The high real value of the rouble is not a
problem for the natural resource extracting
businesses. They are price takers on the global market
and the sell all they produce. However, the REER is too
strong for the remainder of the economy that is
exposed to international competition. Indeed, the
economy is suffering the so called Dutch Disease. This
would be aggravated if oil prices (and the RUB) were to
rise further and especially so as the central bank is
moving towards a pure inflation target and a free E U R speculative positio ns
U S D /C A D
12 5
floating currency. The long term remedy involves
1.35 0 E U R /U S D
10 0
diversification and will require much more far reaching 1.30 0 75
structural reforms than the ones currently under way. 50
1.25 0
-2 25
1.20 0
0
POSITIONING The RUB proxy speculative position is 1.15 0 S peculative positions -2 5
very long but has recently stated to normalize. Thus 04 05 06 07
the negative score indicate that a continued The lack of significant upside progress in
normalization, weighing on RUB, is expected -1 EUR/USD makes the current substantial net
TECHNICALS The 2012-2013 wedge (weak trend or the sub-1.29-area be revisited, speculative
trend ending move) is now crowned by a potentially longs will have to be reduced.
bullish weekly Spring-bottom on the week ending
Jan11 this year. A bullish looking move through the
yearly average and the above the drawn line of (index)
resistance at 35.00-35.25 would heat short-term
conditions up for extension towards more important
topside refs located at 35.75-35.85 the key ref at 36.35
would become seriously exposed. -2
EVENT RISK, LIQUIDITY AND GLOBAL CYCLE The key
event risk for the rouble is if oil prices would fall
sharply. Episodes of flight to liquidity typically
damages the rouble significantly which is aggravated
by concomitant increases in capital outflows. Given the
gradual stabilisation and recovery in the global
economy and ongoing tensions in various parts of the
Middle East, a sudden rise in oil prices appear to be a
greater risk however. The rising revenue that would
follow for an oil exporting country like Russia would be
supportive to the rouble. However, the damaging
effects on the global economy would spill over to
Russia and inflict significant damage also on the
rouble. We do not see any significant domestic political
risks in the near or medium term. A strengthening
global cycle is impacting the rouble positively both via
higher commodity prices and portfolio flows. Rouble
correlations to risk metrics such as the S&P 500 have,
however eased recently.
33
Currency Strategy
Polish zloty PLN Weighted score: 0.4

The repercussions from the Euro zone crises are hitting Fundamentals
the Polish economy with a lag compared to most other Carry
emerging markets. The economy is, however,
Monetary policy
bottoming out and will gradually recuperate. Overall,
we expect the driving forces in the FX market to be Flows
conducive to the zloty, benefiting from decent Valuation
fundamentals and carry and capital flows that will Positioning
remain supportive as the global cycle continues to Technicals
improve. A potential reversal of recent, large, inflows
Liquidity
to the local bond market constitutes a key risk to the
zloty. On balance, we expect the EUR/PLN to move Event risk
towards the bottom of the familiar 4.00 4.20 range. Global cycle
ECONOMIC FUNDAMENTALS Economic activity lost -0.8 -0.6 -0.4 -0.2 0.0 0.2 0.4 0.6 0.8
speed rapidly during 2012. Public investments fell back
after the UEFA Euro Cup while private ditto seem to U S D /C A D
12 5
have taken the Euro zone crisis into account a fair bit 1.35 0 E U R /U S D
10 0
later than in most other places. Consumers, 1.30 0 75
meanwhile, suffered from real wages turning negative 1.25 0
50
and rising unemployment. This is priced in by now. The 1.20 0

25
0
first half of 2013 will remain soft but a gradual rebound S peculative positions
1.15 0 -2 5
over the course of the year lies in the cards. Sentiment 04 05 06 07
indicators are low but have improved lately. Lower
inflation and interest rates will be supportive. Some The lack of significant upside progress in
public investment schemes are also at play and as the long speculative position a burden. Should
global economy recovers and Euro zone risk moderate, the sub-1.29-area be revisited, speculative
Polish investments may well be reinvigorated too. We
have cut our GDP growth forecasts to 2.1% this year
with downside risks given the weak finish of 2012.
Poland may struggle to meet the 3% budget deficit
threshold but overall the fiscal house is in order and
public debt is decent at about 55% of GDP. If global
risk sentiment would worsen, focus would likely be
reoriented towards external balances. With a C/A
deficit at 3.5%/GDP and a high external financing
need, this would weigh on the zloty. 0
MONETARY POLICY CPI fell fast from 4.9% in June to

2.4% in Dec. while core CPI dropped from 2.3% to
1.4%. The policy rate has been cut by 75bps to 4.0%
since November. The latest cut came with a statement
indicating a pause may come but more easing is to
follow. We stick to our view of one more cut in Q1 and
one in Q2 taking the policy rate to 3.5%. The market is
pricing slightly more. Carry is supportive and the non-
interventionist stance is attractive when risk is on. 0
FLOWS The trade balance has improved markedly

since mid-2012 but unfortunately for the wrong
reason. Exports are doing OK but imports have fallen
sharply with domestic demand. The C/A deficit is fully
financed by EU-funds and net FDI. EU fund flows may
fall a bit this year. Portfolio flows, especially bonds,
add to a positive flow picture. A reversal of foreign
bond purchases is a key risk for the zloty. +2
34
Currency Strategy
Polish zloty
VALUATION The zloty has recently been trading at a
level that is fairly well aligned with the 10 years
average of its real effective exchange rate (REER). It is
slightly on the weak side in relation to the nominal
effective (NEER) average. Still, Poland has run current
account deficits since 1996 which cannot be explained
as the result of a temporary investment boom building
productive capacity to repay the borrowed foreign
savings afterwards. Hence we set the valuation score
at: -1
POSITIONING The proxy speculative positioning for
PLN is in a clear downward trend rendering a negative
score. -2 E U R speculative positio ns
U S D /C A D
12 5
TECHNICALS EUR/PLN likes it below the negatively
1.35 0 E U R /U S D
10 0
sloped yearly average and this is PLN bullish. A 1.30 0 75
possible Q3-Q412 triangle or bullish flag could also be 1.25 0
50
interpreted as PLN bullish, but this could also be a 25
1.20 0
broader bottom formation and at this stage it is S peculative positions
0
1.15 0 -2 5
difficult to firmly lean towards one outcome or the 04 05 06 07
other. Through 4.1930 & 4.2180 would show PLN
supply while under 4.0480 would display demand and The lack of significant upside progress in
argue for fresh lows. Until any of those unfold the long speculative position a burden. Should
grade must be kept neutral. 0 the sub-1.29-area be revisited, speculative
EVENT RISK, LIQUIDITY AND GLOBAL CYCLE The
most pressing event risks for the Polish economy and
currency emanates from the Euro zone as it strives to
tackle its deep rooted and complex challenges.
Although Poland is far less trade dependent compared
to the Czech Republic and Hungary, exports of goods
and services still accounts for 38% of GDP.
Furthermore, financial linkages are strong. A sharp
drop in risk appetite typically lifts flight to liquidity to
becoming the sole driver in FX markets. In what we call
the liquidity paradox the zloty often suffers
disproportionally during such periods since it is the
most liquid of the CEE regions illiquid currencies and
hence becomes a popular proxy trade for bearish
positions on the region. The zloty is positively
correlated with the global cycle although the strength
of this correlation has moderated lately.
35
Currency Strategy
Turkish lira TRY Weighted score: 0.5

The economy as well as the lira is at crossroads. The Fundamentals
economy because it is revering up after policy makers Carry
successfully engineered a soft landing to bring Monetary policy
inflation and the current account deficits down from Flows
double digit levels. We are bullish on growth and these
Valuation
imbalances may now grow again. The lira has been
historically stable at a weak level in 2012 but strong Positioning
flows are now pushing it higher to levels in REER terms Technicals

where the central bank is likely to apply the breaks via Liquidity
interest rates as well as interventions we think. This Event risk
will slow, but not nullify, lira appreciation. Global cycle
-0.8 -0.6 -0.4 -0.2 0.0 0.2 0.4 0.6 0.8

ECONOMIC FUNDAMENTALS GDP growth slowed
from 8.5% in 2011 to 3% of just below last year. But
the economy has turned the corner. Manufacturing E U R speculative positio ns
U S D /C A D
PMI is at a 15-month high and credit growth, which 12 5
1.35 0 E U R /U S D
was compressed from over 40% y/y growth to the 15- 10 0
20% range is on the rise again. We expect GDP 1.30 0 75

50
growing by 4.5% and 5% this and next year with 1.25 0
25
domestic demand taking over from net exports as key 1.20 0
0
driver. Consequently, continued disinflation will be 1.15 0 S peculative positions -2 5
harder to achieve and the CA deficit will rise again. 04 05 06 07
Still, fiscal policy is prudent and a second investment The lack of significant upside progress in
grade rating is likely soon. +2 EUR/USD makes the current substantial net
MONETARY POLICY Inflation fell from 9.2% y/y in the sub-1.29-area be revisited, speculative
September to 6.2% in December. Core CPI ended 2012
at 5.8%, above the 5% target. With recovering
domestic demand adding to price pressures and the
lira strengthening while the CA deficit remains large,
the central bank (CBT) is in a dilemma. Recent weeks
TRY gains probably imply that the CBTs REER measure
has risen to the 120-130 intervention zone. We had
expected the CBT to cut the lower end of the interest
rate corridor (O/N borrowing rate) to reduce TRY-carry
and already yesterday they did reduce it by 25 bps to
4.75%. We expect 75bps more in coming moths. The
O/N lending rate was also cut. We expect the 1W repo
to remain on hold at 5.5%. We also expect more hikes
of the Reserve Option Coefficient (allowing banks to
use more FX in reserves) and rising RRR to keep credit
growth from rising (too much) above 20% y/y. In our
scenario, we expect lira appreciation pressure to also
force the CBT to restart daily, pre-announced hard
currency purchases. While carry will be a strong TRY-
positive, these measures will counterbalance and the
score on monetary policy expectations is: -3
FLOWS: Cutting the CA deficit from 10% to 7% of GDP

has buoyed TRY sentiment. Financing will continue to
be abundant but of low quality. Net FDI is low while
portfolios flows and private sector foreign loans (not in
the graph on the right) are large implying rising risks of
reversals. +2
36
Currency Strategy
Turkish lira
VALUATION The demographic structure is one factor
behind Turkeys prime position in terms of growth
prospects in the coming decade in Europe. The large
share of young people, however, has a lower
propensity to save. Indeed, the savings ratio is a mere
15% of GDP and with investments at a much higher
level; the country has a chronic C/A deficit. As long
as financing is sound and investments are productive
(and partially, at least, in the exports sector), this need
not be a problem. But in our view, the C/A deficit and
its financing is a key challenge for Turkey. The massive
external financing need in relation to rising, though
still small, FX reserves, continues to be a potential
major risk for the lira. Keep in mind, though, that even
after the Lehman crash, the lira did not under perform E U R speculative positio ns
other high beta currencies. The lira is somewhat U S D /C A D
12 5
1.35 0 E U R /U S D
weaker than its 10 year NEER trend and somewhat 10 0
stronger than its REER trend but given the above we 1.30 0 75
50
set a valuation score of -2. The graph also shows the 1.25 0
25
CBTs REER measure with the intervention zone at 1.20 0
0
120 - 130 (strong response above 125). -2 1.15 0 S peculative positions -2 5
04 05 06 07
POSITIONING The proxy for speculators positioning is
in line with appreciating TRY becoming longer which is The lack of significant upside progress in
reflected in the positive score. However note that with long speculative position a burden. Should
the slow and quite choppy appreciation, positioning is the sub-1.29-area be revisited, speculative
characterised by quite a lot of short spikes. +1
TECHNICALS USD/TRY retains a cautious negative
downtrend under a negatively (lira positive) sloped
yearly average. This earns a small bullish TRY grade,
but since this in a larger timeframe looks like an
extended correction, the grade is kept low with a
warning of a possible turnaround from levels not far
below in the 1.7520/1.7170 area. Bullishly back above
the yearly average, now at 1.7940 would fast turn
attention to key levels above at 1.8325-1.8350. +1
EVENT RISK, LIQUIDITY AND GLOBAL CYCLE Being
located in a geo-politically instable part of the world
and with Kurdish resistance in the eastern part of the
country, event risks are clearly present. The domestic
political scene is rather stable with presidential and
parliamentary elections due in 2014 and 2015
respectively. Turkeys high oil import dependence
implies a high vulnerability for sharp spikes in the oil
price. This is especially true given the still high CA
deficit and its vulnerable financing. The CBT managed
to get TRY-volatility down significantly last year and it
is less of a high beta currency now. This may, however,
change again, we suspect. With equity and bond flows
making out a large share of overall flows, the lira is
positively correlated to the global cycle.
37
Currency Strategy
Korean won KRW Weighted score: 0.5

Within Asia, KRW was the best performing currency
Fundamentals
appreciating 8.1% vs USD in 2012. The move was
helped by improved economic fundamentals where Carry
exports started recovering and capital flows, especially Monetary policy
into the bond market, were strong. Over the course of Flows
2013, the same trend should continue and move
Valuation
USD/KRW lower. The central bank, as usual, will be
intervening to prevent KRW strength but the Positioning
operations will be to smooth out volatility rather than Technicals
stop outright appreciation. Liquidity
ECONOMIC FUNDAMENTALS The overall growth Event risk
outlook is improving. Exports bottomed in July of last Global cycle
year and stabilization in G3 economies should see d
propel exports to continued improvement in 2013. -0.8 -0.6 -0.4 -0.2 0.0 0.2 0.4 0.6 0.8
The flip side is that domestic demand will remain more U S D /C A D
12 5
subdued than usual since households and corporates 1.35 0 Korea RealE UGDP
R /U%
S Dy/y
10 0
14
are highly indebted. Furthermore, house prices have 1.30 0 75
12 2013 Forecast53.9%
been steadily falling, which places a heavier burden on 1.25 0
0
10
households and SMEs balance sheets and dampens 1.20 0
25
8 0
consumption and investment. The new President Park S peculative positions
1.15 0 -2 5
has promised to deliver supportive fiscal policy but the 6
04 05 06 07
amounts are too little to make an impact on growth or 4
Koreas healthy public debt levels at just 36% of GDP. 2 The lack of significant upside progress in
+1 0
-2 the sub-1.29-area be revisited, speculative
MONETARY POLICY Korea is one of the outliers in -4 longs will have to be reduced.
Asia, in addition to India where we see policy easing -6
this year. In rest of Asia, we expect a hiking cycle to 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13
commence in Q4. In Korea, inflation has eased to
1.4% while the policy rate remains higher at 2.75%. 5
Korea Inflation and Policy Rate
With a weak domestic economy and house prices
falling, Bank of Korea will likely cut interest rate in 1H 4
to support growth. Markets are pricing in a 25bp cut
but with less than 50% probability. A cut will weigh on 3
KRW. In addition, faced with a rapid downward move
in USD/KRW, the central bank will be intervening to 2
reduce volatility and slowdown momentum, which will
be another headwind for KRW. -1 1
FLOWS The current account has supported KRW and a 0

recovery in the export cycle will keep the current 09 10 11 12 13
account in ample surplus of around 3% of GDP. CPI % yoy Policy Rate %
Capital flows will also support KRW. The theme in the
last several years has been a surge in demand for Current Account and Capital Flows % of GDP
8
Korean government bonds. We think this trend will
6
continue since unlike the private sector, government
4
debt remains low and healthy and rates are relatively
2
high in Korea. Historically, the main driver of flows was
equity flows but that hasnt been a big driver of KRW 0
lately. However, going forward with an economy -2
recovery and an equity market filled with companies -4

geared to the global cycle, equity inflows will return -6
and further support the currency. +2 -8
-10
E one 00 01 02 03 04 05 06 07 08 09 10 11 12 13
Current Account Equity Inv Debt Inv
38
Currency Strategy
Korean won
VALUATION According to NEER and REER models,
KRW has recently moved to fair value because of its
outperformance in 2012 in an environment of falling
inflation. The recent sharp weakness in JPY will also
make KRW feel stronger empirically and politically.
With that said, since KRW runs a current account
surplus, accumulates FX reserves through invention
from the central bank, and is weaker relative to history
(USD/KRW reached 900 in 2007) the currency still can
be considered under-valued. +1
POSITIONING Positioning is a headwind for KRW.
Stellar performance in 2012 with a strong trend, has
forced many investors to be long KRW. Other survey
indicators such as Reuters FX Positioning polls show
KRW the most favored currency in Asia as of Jan 17. E U R speculative positio ns
U S D /C A D
The one positive side to positioning is that foreigners 12 5
1.35 0 E U R /U S D
10 0
who have piled into buying Korean government bonds 1.30 0 75
still only own a small proportion of the market at 17% 50
1.25 0
compared to other places that are much higher such as 25
1.20 0
Australia (78%) and Indonesia (30%). -5 S peculative positions
0
1.15 0 -2 5
TECHNICALS The 1mt USD/KRW remains in a steady 04 05 06 07
decline. The pair has passed an ideal turning point for
a larger 2011-2013 correctional sequence, leaving the EUR/USD makes the current substantial net
Q311 low fully in sight. But this low is also long speculative position a burden. Should
corresponding to a lesser albeit alternative 127.2% longs will have to be reduced.
Fibo extension ref likely to add weight to KRW
resistance at/just below at 1050. So the reaction risk is
moderate to high, but as long as the grind south in the
pair remains undisrupted by any bullish candle
formation, the won earns a decent positive grade.
+3
LIQUIDITY, EVENT RISK AND GLOBAL CYCLE. Korea
is vulnerable to risk off and liquidity events and history
is a very good guide. The increase in bond flows
relative to equity may dampen some of this impact but
does not change the direction of the currency. North
Korea tensions still loom and the risk of nuclear tests is
again on the rise. However, surprisingly, North Korean
leader Kim Jong-un made a favourable comment to
improve relations with South Korea at the beginning of
60 USDKRW and VIX 1300
the year, which may reduce event risks. We advise not
taking comments from North Korea too seriously and 50 1250
would like to see it turned into actions before
eliminating this risk. Another event risk is indirect but 40 1200
a rise in tensions between China and Japan will also
30 1150
destabilize the Korean economy. Lastly, Korea is
heavily geared towards the global cycle and a cyclical 20 1100
recovery in the global economy will be positive. The
Korean economy is still export led and the equity 10 1050
market is dominated by large companies who benefit
0 1000
from better global demand. Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13
Vix USDKRW (RHS)
39
Currency Strategy
Chinese yuan CNY Weighted score: 0

CNY exhibited two-way movement last year, Fundamentals
weakening in H1 and strengthening in H2. With Carry
economic fundamentals improving plus a current
Monetary policy
account surplus, CNY appreciation should continue in
2013. Our year end USD/CNY forecast is 6.10. Flows
USD/CNY should be relatively stable going into the Valuation
government transition in March but the downtrend Positioning
should accelerate in H2 as inflation pressures build. Technicals
Our CNY trading strategy is to be long CNH or CNY Liquidity
onshore since they provide positive carry vs USD and
Event risk
we are anticipating a widening of the daily trading
band from +/-1% to +/-1.5%, which should benefit the Global cycle
spot sensitive onshore CNY and CNH more than CNY -0.8 -0.6 -0.4 -0.2 0.0 0.2 0.4 0.6 0.8
NDF (fixing driven).
50 % yoy 3mma
SEB China construction
E U R speculative positio nsindicator
ECONOMIC FUNDAMENTALS Growth outlook is U S D /C A D
12 5
improving as Chinas two engines of growth, exports 40 1.35 0 E U R /U S D
10 0
and construction continue their steady rebound. 2012 1.30 0 75
30
was one of the worst years in over a decade where 1.25 0
50
GDP was only 7.8%, the lowest since 7.6% growth in 20

1.20 0
25
0
1999. However, the economy has bottomed in H2 S peculative positions
10 1.15 0 -2 5
2012 and is recovering. Exports bottomed in August at 04 05 06 07
1% y/y growth and rebounded to above 10% y/y 0
recently. The upward trend should continue. More The lack of significant upside progress in
-10 EUR/USD makes the current substantial net
importantly, the driver of domestic demand, long speculative position a burden. Should
construction, has been picking up as evident by the -20 the sub-1.29-area be revisited, speculative
SEB China construction indicator. Initially, pick up in 07 08 09 10 11 12 13
infrastructure spending helped construction activity
but what will keep the recovery going are increase in
property prices and monetary stimulus. +2 Monetary Policy - RMB trn 3mma
1.5
MONETARY POLICY Inflation remains benign at 2.5%
as of December and it has allowed the central bank to
keep an accommodative policy stance. With the New 1.0
Year starting, banks will get a full annual lending quota

and credit growth momentum will return. However, a 0.5
bigger driver of monetary stimulus recently and a key
theme for 2013 is the rise in non-bank lending. Non-
0.0
bank lending are other financing channels such as
Jan-11
May-11
Sep-11
Jan-12
May-12
Sep-12
Jan-13
Jan-09
May-09
Sep-09
Jan-10
May-10
Sep-10
corporate bond market and trust products. Interest

rate liberalization is opening up new lending channels
New Total Financing New Bank Lending
and acting as monetary stimulus. Inflation is low but
with growth recovering and lending increasing, we
think interest rate hikes will start in Q4. For China the Curreant account and Capital flows % of GDP
12
total monetary policy score is negative since the 10
central bank will continue to intervene in the market to 8
prevent CNY from moving to its fundamental value. 6
-1 4
2
FLOWS The external balance remains CNY positive as 0
China runs a current account surplus of around 3% of -2
GDP. The improving export outlook should keep China -4
in a surplus. Capital outflows continue driven by -6
uncertainty over the leadership change and poor asset 03 04 05 06 07 08 09 10 11 12

price performance. Going forward, we expect capital Current Account Portfolio Inv Other flow s
flows
E oneto return as political transition ends and see
some recovery in asset prices. +2
40
Currency Strategy
Chinese yuan
VALUATION According to NEER and REER models,
CNY is over-valued since CNY has appreciated
considerably over the last 5 years. However, as long as
CNY runs a healthy current account surplus, FX
reserves are rising and official fixing on USD/CNY
remains higher than the more market driven forward
markets, we think CNY is undervalued. +1
POSITIONING Positioning differs by market. First, the
implied carry on USD/CNY NDFs is negative, which
means that offshore investor positioning favour
USD/CNY higher. Second, foreign currency holdings
onshore surged in the beginning of 2012 as CNY
Foreign Currency Deposits
depreciated. However, since August, the authorities 450 70
allowed for USD/CNY to move lower and have caught E U R speculative positio ns
U S D /C A D 60
the long USD/CNY holders. They have yet to move out 400 12 5
1.35 0 E U R /U S D 50
10 0
of their USD holdings, which means that onshore 350 1.30 0 75 40
positioning is opposite to offshore and favour 50
1.25 0 30
USD/CNY lower. Hence, in net, we hold a relatively 300 25
1.20 0 20
neutral view on positioning. +3 250
0
1.15 0 S peculative positions -2 5 10
TECHNICALS The 12mt NDF contract has recently 04 05 06 07
200 0
been sent tumbling down to a multi-year low area.
Jan-12
Mar-12
May-12
Jul-12
Sep-12
Nov-12
Jan-11
Mar-11
May-11
Jul-11
Sep-11
Nov-11
Price action of late posts a real threat to this support EUR/USD makes the current substantial net
and lower levels can no longer be excluded. But since long speculative position a burden.%Should
Total USD bn yoy (RHS)
sharp U-turns have emerged in this area in the past, the sub-1.29-area be revisited, speculative
the reaction risk is also notable and only a moderately
positive grade for the yuan seems warranted at the
time of writing. A convincing breach below mentioned
support would sharpen the positive CNY grade to +3 or
even +4. +2
LIQUIDITY, EVENT RISK AND GLOBAL CYCLE. The
yuan is often seen as a strong currency to hold in
liquidity crisis since CNY pegs to the USD in times of
stress. However, for forward investors, the CNY can
sell off quite a bit and lose value. The key risk for
China this year is a heavy crackdown on non-bank
lending. Our base case is for non-bank lending to
continue rising and act as a monetary stimulus. New
regulations will be to only increase transparency and
disclosure. If there are defaults, we think the 7.4 USDCNY NDF 12M Forward Outright
government, a large bank or asset manager will step in 7.3
to take over the payments. However, there is a risk that 7.2
7.1
the government may want to send a signal to the 7.0
markets that these new lending channels come with 6.9
risk and allow it to default or delay the development in 6.8
6.7
this market, which will be negative to Chinas domestic 6.6
growth. Lastly, in relation to the global cycle, China 6.5
remains the dominant factory of the world and the 6.4
6.3
currency will benefit from a more positive global cycle.
6.2
6.1
Apr-08 Apr-09 Apr-10 Apr-11 Apr-12
41
Currency Strategy
Guide to indicators
COMMITMENT OF TRADERS (COT) REPORT EXTERNAL DATA SOURCES
The CoT report (weekly) seeks to describe market The main data providers used in this report are: SEB,
positioning in a currency future on the Chicago national sources, Reuters Graphics and the Reuters
Mercantile Exchange. The Exchanges trading members Ecowin.
must state whether their trading purposes comprise
either commercial hedging or speculation. Speculators SEASONAL PATTERN
are regarded as either large (non-commercials) or small. We have calculated the seasonal effects using a
We present and analyse the positioning of large regression approach. In the regression we have used the
speculators in order to understand sentiment in the monthly percentage change in the exchange rate as the
currency. The chart presents the net open position dependent variable and dummy variables for the
(non-commercial longs less non-commercial shorts). different months as explanatory variables. Our dataset
For those currencies not available in the CoT report we consists of end of the month daily close FX rates over
have created a proxy (see FX Ringside 2006-04-04). the last 10 years.
BASIC BALANCE SEB STRETCH-O-METER

The basic balance is a flow indicator that includes the This indicator shows how stretched a currency pair is by
current account balance and net flows from both direct- measuring the distance between the current rate and
and equity investments. The broad basic balance also the 200 day moving average expressed in standard
includes the private sectors net trade in debt securities. deviations. Values in excess of +/-3 are to be considered
over-stretched and often signal an increased
EFFECTIVE EXCHANGE RATE (ER) reaction/reversal risk.
A nominal effective exchange rate is the value of a
currency against a basket of currencies. The Bank of
England calculates the ER using IMF-provided weights.
Each currency is given a weight that reflects its relative
importance in the countrys trade flows. An increase
(decrease) in the BoE index reflects an appreciation
(depreciation) of the currency.
42
Currency Strategy
Stretch-o-meter & Seasonality

The stretch-o-meter tells us how many standard deviations away currently the exchange rate is from the 200-day moving
average. Higher absolute values indicate more stretched values.
SEB FX Stretch-o-meter
JPY
CHF
GBP
CAD
SEK High reaction High reaction

risk risk
NOK
USD
AUD
EUR
NZD
-3 -2 -1 0 1 2 3
Seasonal currency patterns

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
USD/AUD -0.1 1.6 0.1 2.3 -0.7 0.9 1.4 -1.8 1.2 1.1 -0.4 1.5 USD/AUD
USD/CAD -0.3 0.8 0.4 1.4 1.2 -0.3 0.8 0.0 1.3 0.0 -0.3 0.2 USD/CAD
USD/CHF -0.8 0.7 0.9 0.2 -0.2 0.5 0.3 0.0 0.1 0.6 0.4 2.0 USD/CHF
USD/GBP 0.9 -0.5 -0.4 1.4 0.0 0.4 0.6 -1.2 0.0 0.5 -0.5 -0.6 USD/GBP
USD/HUF -1.6 0.8 0.9 1.6 -1.1 -0.1 0.8 -1.1 1.0 -0.5 -0.2 0.9 USD/HUF
USD/JPY 0.7 -0.9 -0.4 0.0 0.2 -0.4 0.9 1.0 0.9 1.1 0.6 -0.1 USD/JPY
USD/NOK -0.7 1.0 0.8 2.1 -0.9 -1.1 1.1 -0.5 0.8 0.0 -0.5 0.8 USD/NOK
USD/NZD 1.0 -0.2 -3.0 -0.3 1.1 -2.0 1.7 -0.5 -0.6 -0.2 -1.8 1.7 USD/NZD
USD/PLN -1.2 0.8 0.1 1.6 -1.3 0.2 2.8 -1.6 0.4 0.0 0.3 1.1 USD/PLN
USD/SEK -0.6 0.3 0.9 1.6 -0.8 -0.6 1.4 -0.6 1.3 -0.5 0.1 1.2 USD/SEK
USD/SGD 0.2 0.1 0.3 1.2 -0.4 -0.2 0.9 -0.4 0.2 0.9 -0.1 1.0 USD/SGD
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
EUR/AUD -0.5 -1.2 1.0 -1.7 0.1 -0.9 -1.3 1.3 0.0 -0.7 0.6 -0.1 EUR/AUD
EUR/CAD -0.4 -0.3 0.6 -0.6 -1.9 0.3 -0.6 -0.5 -0.3 0.2 0.6 1.1 EUR/CAD
EUR/CHF 0.1 -0.3 0.2 0.4 -0.6 -0.5 -0.2 -0.5 1.0 -0.5 -0.2 -0.6 EUR/CHF
EUR/GBP -1.6 0.9 1.5 -0.8 -0.8 -0.4 -0.5 0.7 1.0 -0.4 0.8 2.0 EUR/GBP
EUR/HUF 1.3 -0.4 0.2 -0.9 0.4 0.2 -0.8 0.6 0.3 0.8 0.4 0.4 EUR/HUF
EUR/JPY -1.4 1.4 1.6 0.7 -1.0 0.4 -0.8 -1.5 0.2 -0.8 -0.3 1.5 EUR/JPY
EUR/NOK -0.1 -0.6 0.3 -1.4 0.2 1.2 -1.0 -0.1 0.3 0.2 0.9 0.5 EUR/NOK
EUR/NZD -1.5 0.7 4.6 1.0 -1.9 2.1 -1.6 0.2 2.1 0.4 2.2 -0.2 EUR/NZD
EUR/PLN 0.6 -0.3 1.0 -0.8 0.8 -0.4 -2.4 0.9 0.9 0.2 0.1 0.1 EUR/PLN
EUR/SEK -0.1 0.2 0.2 -0.9 0.1 0.6 -1.3 0.1 -0.1 0.7 0.2 0.0 EUR/SEK
EUR/SGD -1.0 0.4 0.7 -0.5 -0.3 0.0 -0.7 -0.3 0.9 -0.7 0.4 0.2 EUR/SGD
EUR/USD -0.9 0.5 1.0 0.7 -0.7 -0.2 0.2 -0.7 1.2 0.1 0.3 1.4 EUR/USD
The table show the monthly seasonal effects (in %) that the quoted currency pairs historically have experienced. A positive value indicates that the currency
pair tends to rise and vice versa. The calculations are done using data over the last 10 years.
Roughly only values of at least +/-1% (bolded) are statistically significant.
43
Currency Strategy
SEB FX Quantitative analyses and Positioning

On a weekly basis we analyse the FX G10 universe on a crowded which tend to lead to a correction
quantitative basis in our publication FX Quant and (normalization) of positioning. However, if risk
Positioning Weekly. The report was previously called appetite continues to increase, as we expect, the
Speculative Positions but as it contains more than the general pattern seen lately ought to continue
analysis of speculators positioning the new title better indicating that speculators will buy risk-on
captures its content. The report contains FX analyses currencies and sell risk-off currencies.
based on (1) historical prices, (2) speculative Speculative positioning development
positioning, (3) SEB risk appetite index, (4) volatility
and (5) correlation. Below is a summary of the main
findings in the latest report.
Risk appetite
Our risk appetite index (RAI) is constructed so that 100
represent a neutral (long-term average) level with a
neutral zone between 96 and 104. 2012 RAI was below
96, in the risk adverse zone, most of the time. The
trough in RAI was at the end of May, since then the
trend has turned on improving growth and even more
expansionary central bank policy.
In December 2012 RAI managed to break into the
neutral zone and have so far had better staying Market environment
power than previously. We expect the uptrend to Using our FX-o-meters we analyze the general FX
continue in Q1 and Q2 2013. However, the rise will as market environment. The FX-o-meters captures the
usual show some volatility. For example, currently one strength of trends, strength of mean reversion
of the main contributors in the index (VIX) is at an tendencies and realized volatility for individual
extremely low level (positive for RAI) but a mean currencies in three standardized measures. We do this
reverting process will most likely soon set in and bring for 17 currencies and the average scores (expressed in
it higher. This would cause a temporary setback in RAI. standard deviations) of these currencies tell us
SEB Risk appetite index something about the market condition. As may be
seen in the chart below, all indicators fell to low levels
in October 2012 and stayed there until around mid
December 2012. This indicates a mostly ranging
market. In such a market environment range trading
strategies should be favored to momentum based
strategies. Now all the variables have come back
to higher levels which indicate that the market is
less range bound. However, the high stretch score
(measuring mean reversion tendencies) is also a
warning that some trends are getting ripe for
consolidations. In this market environment
momentum strategies should be applied again.
Market environment based on FX-o-meters
Positioning
1.8 0.15
Our analysis of positioning is based on speculative Trend (LHS)
1.6 0.10
(non-commercial accounts) actors positioning in the Stretch (LHS)
1.4 Vol (RHS) 0.05
FX futures market as reported by CFTC in their weekly 0.00
1.2
Commitment of traders report. The development of
Standard deviations
Excess volatility
-0.05
1.0
positioning has lately shown a positive sentiment for -0.10
0.8
EUR and a negative one for USD. Risk-on currencies, -0.15
0.6
such as AUD and NZD, have also seen net purchases -0.20
0.4
while risk-off currencies, such as JPY (and USD) have -0.25
0.2
received a negative treatment of speculators. This is in -0.30
0.0 -0.35
line with the increase in risk appetite which we have
6/4
7/4
8/4
9/4
10/4
11/4
12/4
1/4
2/4
seen (as illustrated by our RAI). Some bets are now
44
Currency Strategy
Contacts
STOCKHOLM COPENHAGEN
Carl Hammer (editor) Jakob Lage Hansen
+46 8 506 231 28 +45 33 28 14 69
carl.hammer@seb.se jakob.lage.hansen@seb.dk
Richard Falkenhll FRANKFURT

+46 8 506 231 33 Thomas Kbel
richard.falkenhall@seb.se +49 69 97 27 12 45
thomas.koebel@seb.de
Dag Mller
+46 8 506 231 29
OSLO
dag.muller@seb.se
Erica Blomgren
+47 22 82 72 77
Mats Olausson
erica.blomgren@seb.no
+46 8 506 232 62
mats.olausson@seb.se
SINGAPORE
Sean Yokota
Karl Steiner
+65 6505 0500
+46 8 506 231 04
sean.yokota@seb.se
karl.steiner@seb.se
Anders Sderberg
+46 8 506 230 21
anders.soderberg@seb.se
45
Currency Strategy
Notes
This page has been left blank on purpose
46
Currency Strategy
Notes
This page has been left blank on purpose
47
With an eye for trading opportunities
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By using Trading Station, you are always in contact with the global trading market.
You get access to the latest exchange rates, and you can buy and sell at the blink of an
eye spots, swaps or forwards.
To find out how you can develop your electronic trading, visit us at www.seb.se/mb.
Or call one of our traders to activate our e-service:

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WEDNESDAY

Reduced tail-risks lessen safe-haven attractiveness? 23 JANUARY 2013

BUY THE CS BASKET We recommend buying a G10 SEB FX Scorecard

Forecasts and FX Scorecard

SEB FX G10 Scorecard, Medium Term

G10 FX Scorecard - Contributions to total score

USD Weighted score: -0,4 EUR Weighted score: 0

JPY Weighted score: -0,6 GBP Weighted score: -0,7

CAD Weighted score: 0 CHF Weighted score: -0,8

AUD Weighted score: 0,2 NZD Weighted score: 0,2

DKK Weighted score: -0,2

-0,8 -0,6 -0,4 -0,2 0,0 0,2 0,4 0,6 0,8

PLN Weighted score: 0.4

TRY Weighted score: 0.5

KRW Weighted score: 0.5

Big Picture: Economic recovery -> lower demand for Quality?

At long last, the global economy is beginning to

* Bank of Italy: Recent estimates of sovereign risk premia

FED OUTLOOK STILL USD NEGATIVE... Its most

.AND US DEFICITS NEEDS MORE ADJUSTMENTS

IS QUALITY LESS IMPORTANT NOW? Over the next

improving risk appetite. In this environment, a Positioning: 7.5% (5%)

SEK -2% -2%

USD Weighted score: -0,4

which has to be raised before end of February to shun 1.20 0

US dollar SEBEER Long-term Fair value, USD Index

The euro EUR Weighted score: 0

SEBEER Long-term Fair value, EUR Index

from a Q3 12 downside overstretch and has even been

Japanese yen JPY Weighted score: -0,6

ECONOMIC FUNDAMENTALS Growth contracted -0,8 -0,6

MONETARY POLICY The new government has made a

Japanese yen SEBEER Long-term Fair value, JPY Index

LIQUIDITY, EVENT RISK AND GLOBAL CYCLE

GBP Weighted score: -0,7

MONETARY POLICY After the BOE reached the GBP

SEBEER Long-term Fair value, GBP Index

targeting levels below the 2009 low of 73.30 then

Canadian dollar CAD Weighted score: 0

falling unemployment, currently the lowest since 1.20 0

MONETARY POLICY BOC has remained on hold since

FLOWS Weak competitiveness continues to generate

SEBEER Long-term Fair value, CAD Index

CAD weakness going forward. -1 The lack of significant upside progress in

2011-2013 advance still looks correctional compared

AUD Weighted score: 0,2

MONETARY POLICY In December the central bank

SEBEER Long-term Fair value, AUD Index

New Zealand dollar

due to still persisting international challenges, 1.20 0

MONETARY POLICY RBNZ has remained on hold at

SEBEER Long-term Fair value, NZD Index

CHF Weighted score: -0,8

MONETARY POLICY In its December meeting the SNB

SEBEER Long-term Fair value, CHF Index

while inside 141-144. 0

Swedish krona SEK Weighted score: 0,2

will be slow and unemployment should rise towards 1.20 0

MONETARY POLICY Riksbank has conducted

FLOWS The external balance remains SEK positive as

SEBEER Long-term Fair value, SEK Index

LIQUIDITY, EVENT RISK AND GLOBAL CYCLE.

Norwegian krone NOK Weighted score: 0,4