NOK/SEK flows: Cross currents
Firm data from both Norway (CPI) and Sweden (monthly output, GDP) , though both need to be seen in context
Norges Bank policy is already seen tight and well ahead of the curve
Cross currents from subdued oil amid nuclear progress hopes and risk market volatility
As elsewhere, a bit of a mixed backdrop to NOK/SEK from current cross currents - recent risk setbacks on the tech equity side having the potential to undercut the high beta SEK if currently contained volatility does pick up, while at the same time the recent oil correction and subdued price action there also factoring into the NOK equation.
On the oil front, the calm trade at present reflects increased market tolerance for exchanges and tensions as well as a NYT article hinting that the US and Iran are making some progress on agreeing on 4 key nuclear themes (length of suspension, dilution with only US observation, some less clear cut agreement on dismantling sites, and also less clear agreement on inspection). It’s enough though to keep the market hoping that a key blocker can be sufficiently fudged for both sides and the US is backing off the starker transfer demands that Iran was refusing.
On the data front, firmer data on both sides but with caveats on both too. Norway CPI came in on the upside at 3.4%y/y on its core, topside of market consensus, although we continue to view the figure as far more subdued in trend terms especially on an ex food core basis. Moreover, the Norge Bank looks way ahead of the curve and we see it back to cutting next year from rates that are well above neutral. For Sweden, latest production and monthly GDP also on the firm side, and do suggest a good Q2 shaping up, which perhaps dilutes some pessimism. Nonetheless Q2 and the rest of the year have a way to go to even come close to Riksbank projections and survey evidence has been less positive.