STIR: Modest Hawkish Adjustment In Fed Pricing After PPI

EURNOK has moved away from session highs of 11.5916, but remains 0.2% higher today. The weaker-than-expected Q4 mainland GDP reading spurred a light dovish reaction in NOK rates, but today’s rally in oil prices has dampened some of the FX feedthrough.

• After piercing 11.6000 yesterday, EURNOK was unable to test the November 25th low 11.5192. This level remains a key support.
• The 20-day EMA at 11.7025 provides initial resistance, clearance of which is required to undermine a bearish theme.
• Our commodities team have highlighted the impact of increased geopolitical tensions and risks of sanctions tightening supplies as drivers for today’s brent crude rally, weighed against the potential impact of US tariffs on global demand.
• Despite the Q4 GDP reading, Nordea still expect only two cuts in 2025 – the most hawkish view out of the analysts we track. They note that “the economy is not as weak as the headline numbers indicate and growth will pick up going forward”.
• Focus turns to Norges Bank Governor Wolden Bache's annual address on Thursday afternoon. SEB note that “the address aims at highlighting long-term and structural economic policy challenges”, so new policy hints are not the norm. If near-term policy considerations are raised in the speech, we expect guidance for a 25bp March cut to be re-iterated.

• Date $MM Issuer (Priced *, Launch #)
• 02/11 $Benchmark Israel 5Y +150a, 10Y +165a
• 02/11 $700M Snap Inc 8NC3 7%a
• $9B Priced Monday
  • 02/10 $6.5B *Eli Lilly $1B 3Y +27, $1.25B 5Y +42, $1B 7Y +50, $1.25B 10Y +60, $1.25B 30Y +80, $750M 40Y +90
  • 02/10 $2B *Union Pacific $1B 10Y +65, $1B 30Y +88
  • 02/10 $500M *Textron 10Y +102

• USDCHF is rising for the fourth consecutive trading session on Tuesday, having extended its firm recovery from 50-day EMA support last week. This average continues to provide significant support for the pair, with the pair unable to close back below since prior to the US election despite multiple attempts in recent weeks. It currently intersects at 0.9017 and remains the key short-term technical parameter.
• The volatility of the Japanese yen remains a focus for G10 currency markets, evidenced by the intra-day ranges that continue to push 1% on a frequent basis. However, with a developing hawkish BOJ narrative bolstering recent Yen gains, USDCHF could provide a cleaner expression of any renewed greenback strength in coming sessions.
• Bolstering this point, we have both US and Swiss inflation data across Wednesday/Thursday which should keep the market’s attention on USDCHF relatively high this week. A confirmation of the diverging central bank stances would place the focus back on the most recent highs around 0.9200, coinciding with strong trendline resistance drawn across the 2023 and 2024 highs. Above here, 0.9244 remains the key medium-term target for the rally.
• Interestingly, straddle pricing for a Thursday expiry is showing very little additional premium for these event risks, leaving markets to break-even on a ~50 pip move. This perhaps bolsters the case that 0.9200 could cap any bullish short-term extension this week, subject to broader tariff related developments.