EUR, NOK flows: NOK supported by CPI, German output strong
NOK firmer after CPI comes in above consensus. EUR should find support from stronger German output
Norwegian CPI has come in higher than expected at 3.2% y/y headline and 3.1% core, discouraging expectations of any early Norges Bank easing. Following the weaker than expected Swedish CPI data on Thursday, this should further encourage a preference for NOK over SEK. NOK/SEK had already bounced a little from the low just below 0.91 seen on Thursday, but has extended the bounce a little above 0.9150. We would look for further gains longer term, with 0.90 having historically proved rock bottom for NOK/SEK, and yield spreads already pointing substantially higher.
German industrial production has also come in stronger than expected in November, following Thursday’s strong orders data. The underlying trend looks to be turning clearly more positive, and should be mildly supportive for the EUR. The USD is generally firmer overnight, but this data should help EUR/USD find support above 1.16 provided that the US employment numbers aren’t significantly stronger than expected today.
