EURJPY TECHS: Reversal Higher Extends

• While the US Tnotes trades heavy into the European session following the Employment, Earning and Michigan beat on Friday, the German contract is exactly where it was trading at pre NFP, was circa 133.39.
• The US TYH5 would need to trade up to 109.18 for a similar unwind.
• Cash sellers were noted on the Open, but the range is still limited to 20 ticks, while Risk is still tilted to the upside and initial resistance remains at 133.86.
• Bund printed a 132.95 low on Friday, but first support is still eyed at 132.72, which is followed by the 132.34 gap.
• There's no Tier 1 data to start the Week, US NY Fed 1yr Inflation expectation is out later today, but won't be a market mover with focus on the US CPI this Week.
• SPEAKERS: ECB Lagarde at the EU Parliament.

NOKSEK rose less than 10pips following the stronger-than-expected Norway January CPI-ATE reading (2.8% Y/Y vs 2.6% cons). This data alone wasn’t expected to push Norges Bank away from its guidance for a March cut, with Q4 GDP due tomorrow and another CPI report also due ahead of the March decision. The large upside surprise to Swedish January CPI also probably added some upside risks to the Norwegian print this morning.

• Monthly CPI-ATE growth was 0.1% M/M, above last January’s 0.0% M/M and the 2000-2019 January average of -0.4% M/M. We will provide further details on the release in due course.
• Swedish December monthly activity data was also released, with household consumption falling 0.3% M/M after positive readings in both October and November.
• These data fed into the Q4 flash GDP indicator, which was released at the end of January and printed below the Riksbank’s December MPR projection (0.2% Q/Q vs 0.4% Riks exp).
• The monthly and quarterly GDP indicators are quite unreliable and prone to revisions though, so the full Q4 report at the end of February will be an important release for the Riksbank. 

We released our BOE review over the weekend, in case you missed it:

• Dhingra reinforces her dovish status; expect her to keep voting for cuts for some time. While we expect Mann to vote for cuts at least in March and May (but it is more uncertain beyond then - we talk through the rationale).
• "Case 1" is seen as less likely - but this doesn't mean less downside risks... just different downside risks.
• We think this leaves us only needs one more MPC member in favour of a cut in March to sway the outcome - but at this point think that is relatively unlikely. We note our rationale in the report.
• We look at the takeaways from the new inflation forecasts, the additional of the word "careful" to the guidance and the Bank's updated neutral rate estimates.

 For the full publication click here.