NOK, SEK flows: NOK edges higher after CPI

NOK is up modestly after the slightly stronger than expected Norway December CPI data, which saw the core CPI fall to 5.3% y/y from 5.5% in November, against a market consensus of 5.2%. It’s doubtful that his will have any impact on Norges Bank policy, so there is unlikely to be any large NOK reaction. However, we continue to look for NOK/SEK gains in the bigger picture due to the widening of yield spreads we have seen in the last month. This morning’s Swedish data was mixed, with a recovery in production but big weakness in new orders, and from here there should be scope for NOK/SEK to begin the climb back towards parity.