Fundamental highlights this week

• The most important indicator of the week and the month, of great importance to consumer spending and the housing market

• So far we expect a rise of 90,000 in employment, but this figure may have changed when the economic indicators have been released next week (among them ADP's estimate of employment).

• In spite of a slow rise in unemployment since March, September saw wage increases of 0.4% and 4.1%. A rate of 0.4% is slightly above the trend growth rate and we expect the rate to fall towards 0.3%.

The US: ISM for the manufacturing industry - Thursday

• ISM is the nation-wide sentiment indicator for the manufacturing industry and gives a good indication of the development in industrial production and GDP.

• In September, the ISM fell from 52.9 to 52. There are generally mixed signals about the development in ISM.

• ISM often begins to rise after the Fed has lowered interest rates. On the other hand, the high oil prices may dampen ISM, and the regional business indicator Philly Fed points to a fall. Basically we are inclined to expect a fall in ISM.

The US: monetary-policy meeting at the Federal Reserve - Wednesday

• In September, the Fed took most market participants by surprise after the bank lowered the leading Fed funds rate by 0.5 percentage point. The question is whether the Fed will make a surprise move again.

• At the moment the meeting is expected to result in a quarter-point cut in the Fedfunds rate.

• Among other things, this is because data about the housing market have proved considerably weaker than expected.

Expected Exchange Rates

United States Dollar EUR/USD USD/DKK

• The major highlight of the week is the monetary policy meeting at the FED and the following interest rate announcement.

• There is currently 86% likelihood of a 25bp rate cut.

• We also expect the FED to cut rates by 25bp.

• A rate cut will most likely put further pressure on USD.

• If 143.50 (520) is breached with a dayly close above this point, the road is open for a reunion with the old top from September 1992 at 145 (514) against EUR (DKK).

Great Britain Pound EUR/GBP GBP/DKK

• This week??™s macroeconomic events are house prices for October and PMI manufacturing.

• GBP is difficult to predict for the time being. On Tuesday it looked as if GBP was in for appreciation, but it currently looks as if GBP will weaken.

• There has been no major news for the past week and we are not expecting major news in the coming week.

• A new outburst of risk aversion will most likely put pressure on and weaken GBP further.

• We are expecting range trading for the coming week

Japanese Yen EUR/JPY JPY/DKK

• Risk appetite has re-emerged and for the short term it is far from obvious what it will take to reverse the trend.

• We expect some resistance at around the 21-day moving EUR/JPY average. A rise beyond this point indicates that the cross is bound for higher levels.

• Focus this week will be on the monetary policy meeting at BoJ. We expect that the central bank will leave rates unchanged and that there will be no hikes as long as the turmoil in the financial markets and the uncertainty surrounding developments in the US economy persist.

Swiss Franc EUR/CHF CHF/DKK

• In the absence of interesting macro economic announcements from Switzerland in the coming week, risk appetite/ aversion will be deciding the direction of CHF.

• Technically there is a fair amount of support around the 21-day moving average in EURCHF.

• Persistent risk appetite is likely to drive CHF lower and the EUR/CHF rate higher over the coming week.

Norwegian Krone EUR/NOK NOK/DKK

• This week??™s highlight will be the monetary policy meeting at Norges Bank on Wednesday. Recent rate hikes in Norway have begun to dampen the economy. We expect rates to be raised once more before year end, but expect the central bank to wait until the December meeting.

• The rising oil prices have caused NOK to strengthen over the past couple of days. Although it cannot be ruled out that prices may rise further, we still believe that the upside potential is limited.

• Hence we maintain our long EURNOK position

Swedish Krona EUR/SEK SEK/DKK

• This week??™s all-important event will be the monetary policy meeting at Riksbanken on Tuesday. There is still a need for further rate hikes in Sweden, but we do not expect the central bank to raise rates until the December meeting.

• As jitteriness is still lurking just beneath the surface, market sentiment continues to be crucial to the direction of SEK, as a renewed outbreak of risk aversion would weigh on the SEK.

• We have chosen to maintain our long EUR/SEK position at this point, but a slide below the 21-day moving average will make us reconsider our view.