Montly Global FX Strategy: Noreda Research

EUR/USD: EUR/USD reacted to the ECB QE launch as anticipated, and bounced. The "policy divergence" theme is in question as increasing volatility suggests indecision - and potential for further upward correction in the near term. If the pair reaches 1.1450, we may have to revise our forecasts, which see 1.05 at end 2015.
EUR/GBP: Softer UK labour market data suggests the BoE may be patient for longer. Growing election risks in May have already boosted volatility, and should support higher EUR/GBP.

JPY: Headline inflation is slowing in Japan as elsewhere, but core inflation should remain sticky due to the tight labour market. The BoJ and government do not agree on the QE - is more needed? Short term risk: stronger JPY.

EUR/CHF: The SNB has been "hands off" for two months now, but the correction in the USD/CHF is putting pressure on EUR/CHF too. The SNB will intervene again, perhaps unconventionally, to bring EUR/CHF above 1.10.

EM FX: EM FX is still very much a EUR/USD game. Eight out of the ten EM currencies that we cover are weaker vs. USD year-to-date, while nine out of the ten are stronger vs. the EUR. Any short-term relief coming from a rebound in the EUR/USD should be used to prepare for renewed USD strength and EM weakness. Two EM currencies stand out: RUB and BRL.

SEK: Inflation will not rise fast enough and we thus believe that the Riksbank will cut to -0.5% and extend the QE program by SEK 50 bn at its late April meeting. There are other possible Riksbank measures, which mean huge event risks for both rates and the SEK.

NOK: Reluctance to cut by Norges Bank could be seen as a sign of less weight put on the tail risk in Norwegian economy. One could also see it as a way to save some ammunition and perhaps have the threat of cuts as a way to keep NOK weak.

DKK: For the time being it seems that the strong defence of the Danish krone by Nationalbanken has succeeded and the short end of the Danish rate curve has moved higher. But looking forward we see a clear risk that the pressure on the Danish krone could return.