One of the first institutions to move on their exchange rate forecasts following the release of June's non-farm payroll release is Italy's Intesa Sanpaolo.

Markets sold the dollar after it was shown the US economy only added a further 38K jobs to the payroll, well below analyst forecasts for a reading of 164K.

Fed funds - a measure of how markets are pricing the prospect of future interest rates at the Federal Reserve - fell back sharply with markets now only pricing in an slight chance for a rate hike to be delivered by December 2016.

“The fact that the next Fed hike has been pushed back in time prompts us to revise up our projections for the single currency, while leaving unchanged its expected trend: decline in the near term towards 1.10-1.08 on a 1m-3m horizon in correspondence with the next Fed hike and subsequent upside reversal towards 1.12-1.15 on a 6m-12m horizon,” says Asmara Jamaleh at Intesa Sanpaolo in Milan.

These levels may seem too low when considering that the exchange rate is EUR/USD 1.13 today, but they reflect three aspects:

(1) the prospect of a string of uninterrupted hikes once the Fed resumes acting rates;

(2) the still very cautious fed funds hike path priced in by the markets; (3) the prospect of rates in the euro area staying at zero at least throughout 2017, as opposed to rising rates in the US.

“However, risks to the forecast are skewed slightly upwards for the single currency,” says Jamaleh.

Elsewhere, we report Denmark’s Danske Bank are looking for for a gradual strengthening of the euro.

Their most recent exchange rate forecasts show 1.12 is pencilled in for September, 1.14 for December and 1.18 will be achieved by June 2017.

Danske are officially holding a 0.76 EUR/GBP forecast for September 2016, 0.74 for the year-end and 0.75 for June 2017.

In GBP to EUR terms this equates to 1.3158, 1.3514 and 1.3333.

The GBP to USD exchange rate is forecast to rise to 1.47 in September 2016, 1.54 by the turn of the year and 1.57 by June 2017.