BoJ the focus on Friday and surprised market again
Already plenty of reasons for JPY recovery, but increasingly hard to find a trigger
SEK vulnerable vs NOK unless CPI comes in strong
USD generally looks vulnerable if US outperformance fades
BoJ the focus on Friday and surprised market again
Already plenty of reasons for JPY recovery, but increasingly hard to find a trigger
SEK vulnerable vs NOK unless CPI comes in strong
USD generally looks vulnerable if US outperformance fades
Swedish April CPI has come in somewhat above market consensus, at 3.7% y/y headline and 2.3% y/y core. While EUR/SEK initially fell back on the news, it has quickly reversed those declines and is now higher on the day. EUR/SEK has been soft through the last couple of weeks, significantly outperforming the yield spread correlation, helped by the negative EUR sentiment that emerged after the European elections and the announcement of the French parliamentary elections at the weekend. So some correction was due and the firmer CPI provides a profit-taking opportunity. SEK still looks to be on the strong side against the EUR and particularly the NOK. While EUR/SEK may well hold at lower levels given Eurozone political concerns, the case for NOK/SEK to hold below parity looks much weaker.
USD strength in general continues to look a little fragile after the softer than expected CPI and PPI data and the higher jobless claims data seen in the last few days. While there may be limited enthusiasm for the EUR due to the current political uncertainties, the USD remains at generally elevated levels that will be hard to justify if US growth numbers stop outperforming those elsewhere.