Relative monetary policy is back on the agenda in global FX markets: Danske Bank

Quotes from Danske Bank:

-Relative monetary policy is back on the agenda in the global FX markets. Although Yellen's statement in her semi-annual testimony to Congress yesterday was quite neutral, we still expect that forward guidance will be changed in March in the sense that 'patience' will be removed from the FOMC statement.

-We expect the first rate hike to arrive in June and still call for a broadly stronger USD over the coming 3-6 months.

-In our view, the USD should strengthen as long as we are waiting for the first rate hike, particularly versus currencies that are backed by ultra-loose monetary policy, such as the EUR, JPY, CHF and SEK. We forecast EUR/USD at 1.10 in 6M and expect USD/JPY to shoot higher to 125 in 6M.