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SCANDIS: Equity Pullback Sees EURNOK Pare Yesterday’s Losses

SCANDIS
CEEMEABulletSwedenNorwayGlobalForeign Exchange BulletsRegionMarkets

The pullback in European equities has weighed on Scandi currencies today, with EURNOK having recovered ~60% of yesterday’s losses (which were a function of a more hawkish-than-expected Norges Bank decision and a rally in equity/crude prices).

  • NOKSEK is 0.1% higher at typing, with the 50-day EMA (at 0.9713 today) continuing to cap upside. A close above this average today would be a bullish signal heading into next week.
  • With the Norges Bank now out of the way (our review is here) , focus turns to next Wednesday’s Riksbank decision.
  • The MNI Markets Team expects a 25bp cut, but think the revised rate path projection could open the door to 50bp cuts at the November and/or December meetings.
  • Although 50bp Riksbank cuts are not in our base case for the remainder of this year, the Fed’s 50bp cut this week may embolden the Executive Board to consider such a move in upcoming meetings.
  • However, these deliberations will likely be best examined in the September meeting minutes, rather than at next week’s decision.
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The pullback in European equities has weighed on Scandi currencies today, with EURNOK having recovered ~60% of yesterday’s losses (which were a function of a more hawkish-than-expected Norges Bank decision and a rally in equity/crude prices).

  • NOKSEK is 0.1% higher at typing, with the 50-day EMA (at 0.9713 today) continuing to cap upside. A close above this average today would be a bullish signal heading into next week.
  • With the Norges Bank now out of the way (our review is here) , focus turns to next Wednesday’s Riksbank decision.
  • The MNI Markets Team expects a 25bp cut, but think the revised rate path projection could open the door to 50bp cuts at the November and/or December meetings.
  • Although 50bp Riksbank cuts are not in our base case for the remainder of this year, the Fed’s 50bp cut this week may embolden the Executive Board to consider such a move in upcoming meetings.
  • However, these deliberations will likely be best examined in the September meeting minutes, rather than at next week’s decision.