SEK: EURSEK Pierces Trendline Support As Krona Strength Persists
Feb-05 11:26
EURSEK has pierced trendline support drawn from the December 2023 low, bringing this week’s sell-off to 1.3%. A clear breach of this trendline (11.3574 today) would signal scope for a deeper retracement and a move towards the Oct 1 low at 11.3024.
- Today’s SEK strength comes despite a relatively subdued session for European equity futures (-0.15% today) and an intraday widening in the 2-year EUR/SEK swap differential (+2bps today to -3.2bps).
- Zooming out a little, a faster pace of ECB easing relative to the Riksbank may limit recoveries in EURSEK in the short-term, though swings in broader risk sentiment in response to US trade developments remain a risk to the krona.
- Swedish January flash inflation is due tomorrow at 0700GMT/0800CET, alongside a speech from Governor Thedeen at 0730GMT (though don’t expect much deviation from his rhetoric in the minutes: “the policy rate has probably been lowered sufficiently”).
Figure 1: EURSEK
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BONDS: Bund/Schatz Swap related trade
Jan-06 11:26
Bund/Schatz Swap related trade:
- DUH5 7.95k at 106.73 (suggest Payer).
- RXH5 1.36k at 13.40 (suggest Receiver).
GERMAN DATA: Small Regions Suggest Some Upside Risk For National CPI
Jan-06 11:23
December CPI Y/Y prints for Hesse (2.7% vs 2.0% Nov) and Rhineland-Palatinate (3.3% vs 2.7% Nov) clearly accelerated more than consensus expects for the national-level CPI due today (with the median analyst looking for 2.4% Y/Y after 2.2% in Nov). The Hesse M/M print of +0.7% was also notably higher than the national-level consensus of +0.3%.
- This means that there should be some upside risks here, but as Hesse and Rhineland-Palatinate cumulatively only account for 12.6% of the national basket, we can't put too much weight on the apparent beat just yet.
- Also, as the Hesse & R-P statistics agencies both noted some elevated uncertainty with the data on the back of a methodology update, the national agency Destatis might also be less certain on the flash print than usual. Nevertheless, focus lies on that national-level data, scheduled to be released today at 1300GMT/1400CET.
- Final data bringing some more clarity for Hesse and R-P is scheduled for Thursday, alongside releases from a wider set of other states, before the finalised national CPI release on Jan 16.
- Looking at the services prints of the two states already released, developments were mixed - there was some acceleration in Hesse but a lower print than before in Rhineland-Palatinate.
LOOK AHEAD: Monday Data Calendar: Serv/Comp PMIs, Dur/Cap Goods, Tsy 3Y Sale
Jan-06 11:22
- US Data/Speaker Calendar (prior, estimate)
- 6-Jan 0915 Fed Gov Cook eco-outlook at law and economics conf (text, Q&A)
- 6-Jan 0945 S&P Global US Services PMI (58.5, 58.5)
- 6-Jan 0945 S&P Global US Composite PMI (56.6, --)
- 6-Jan 1000 Factory Orders (0.2%, -0.4%); ex-trans (0.1%, --)
- 6-Jan 1000 Durable Goods Orders (-1.1%, -0.4%); ex-trans (-0.1%, 0.3%)
- 6-Jan 1000 Cap Goods Orders Nondef Ex Air (0.7%, 0.1%)
- 6-Jan 1000 Cap Goods Ship Nondef Ex Air (0.5%,0.3%)
- 6-Jan 1130 US Tsy $84B 13W and $72B 26W bill auctions
- 6-Jan 1300 US Tsy $58B 3Y note auction (91282CMF5)
