Another set of soft inflation numbers is set to be released from Europe in the coming weeks. We see both GBP and NOK inflation surprisingly low for November, while Swedish evidence is a tad more mixed.
Norges Bank finally made a decent attempt at underpinning the NOK, but the issue is that rates don’t really matter for the NOK. They matter a bit more for the SEK, which makes a SEK long tempting ahead of next week. Is the Scandi bloodbath over?
The USD is on the move and as per usual, repercussions are felt across the financial markets. Disinflation seems to be pretty across most of the globe and China is now actively exporting lower prices again. Position accordingly.
Norges Bank is still asked to sell plenty of NOKs a month by the Treasury Department, while the scope for tax income is falling apart by the week. Position accordingly through June.
Norges Bank is once again caught behind the curve in its FX management policy due to the landslide in Natural Gas prices. Unless Norges Bank immediately stops selling as many NOKs per day, the NOK selling pressure is likely going to continue.
The market is doing exactly what it should do, if US/Western inflation is falling and China is fueling the global economic growth momentum again. The question is whether it is sustainable to bet on that cocktail. We doubt it.