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NOKSEK nearing key support

SCANDIS
  • NOKSEK is looking at interesting levels, having broken through the 200-dma yesterday. Swedish inflation came in higher than expected yesterday and we saw some analysts more to change their base case in favour of looking for 50bp hikes (and potentially even inter-meeting hikes).
  • NOKSEK key support lies at the 1.0200 handle. This is highlighted by:
    • 1.0210, the 50.0% retracement of the major bull rally between November 2020 and March this year.
    • 1.0202, a trendline support drawn from the Jul 20, 2021 low.
  • Clearance of this support would strengthen bearish conditions. The trend condition is oversold, however, a reversal signal in price is required to highlight a potential short-term base. The cross remains vulnerable - for now.
  • From a fundamental point of view after yesterday's inflation print the market is already starting to look for a more aggressive hiking path. And as we noted in the April MNI Riksbank Review, we didn't think the bar to a 50bp hike was as high as some had expected, and that view is now being priced into the market. The Riksbank's alternative scenario contained in our calculations a 100% probability of a 50bp June hike with 131bp of hikes in the remaining three meetings of the year.
  • However, we think given the technical support level and the moves seen so far, we will probably need to see a trigger to break lower (possibly a Riksbank member more openly discuss 50bp?).


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  • NOKSEK is looking at interesting levels, having broken through the 200-dma yesterday. Swedish inflation came in higher than expected yesterday and we saw some analysts more to change their base case in favour of looking for 50bp hikes (and potentially even inter-meeting hikes).
  • NOKSEK key support lies at the 1.0200 handle. This is highlighted by:
    • 1.0210, the 50.0% retracement of the major bull rally between November 2020 and March this year.
    • 1.0202, a trendline support drawn from the Jul 20, 2021 low.
  • Clearance of this support would strengthen bearish conditions. The trend condition is oversold, however, a reversal signal in price is required to highlight a potential short-term base. The cross remains vulnerable - for now.
  • From a fundamental point of view after yesterday's inflation print the market is already starting to look for a more aggressive hiking path. And as we noted in the April MNI Riksbank Review, we didn't think the bar to a 50bp hike was as high as some had expected, and that view is now being priced into the market. The Riksbank's alternative scenario contained in our calculations a 100% probability of a 50bp June hike with 131bp of hikes in the remaining three meetings of the year.
  • However, we think given the technical support level and the moves seen so far, we will probably need to see a trigger to break lower (possibly a Riksbank member more openly discuss 50bp?).


Keep reading...Show less