FXStreet (Delhi) – Research Team at Danske Bank, expects oil prices to stay low for longer but to stabilise in 2016 as inventory build-up is reduced. Key Quotes “The US manufacturing cycle has been hit by the oil price collapse but, in our view, the Fed will be less worried about oil prices as it targets core inflation. Low oil prices are set to put pressure on the US high-yield market, threatening the economy. We expect inflation to edge up in the eurozone even if oil prices stay low. Our base case is that the ECB is done easing but if oil prices undershoot our expectations, it may be forced to do more QE. We believe Norway will escape recession as policies adjust; we expect the NOK to remain weak over 1-3M and strengthen in 6-12M as the business cycle turns. We expect emerging market oil pegs to feel the squeeze; China and SAMA are leading merging market selling. In our view, upside inflation surprises are under-priced in the Eurozone. We like to be positioned for higher inflation at the long end of the inflation swap curve or through 5Y German linkers. We expect EUR/USD to rise in 2016 with or without low oil prices; we are already long the cross through options for a medium-term move higher.” For more information, read our latest forex news.