Position for rise in NOKSEK ahead of Norges Bank meeting next week
Tuesday’s release of Swedish was broadly in line with market expectations with May CPI rebounding to 0.7% y/y (from 0.5% y/y April). However, since is still well below the Riksbank’s already downwardly revised 1% y/y 2013 forecast, we continue to view that NOKSEK is likely to continue to move higher. The cross rallied strongly at the start of the week after Norway’s core CPI jumped to 1.4%, above the Norges Bank assumption for 1.1% in Q2. This means it will be very difficult for the Norges Bank to back away from its mildly hawkish bias when it next meets on June 20. The relative Sweden-Norway data surprise indices indicate that NOKSEK can build on its rally, extending to the upside above 1.20
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BNP Paribas