Will the Riksbank cut rates in April or not? It cannot be excluded, but we believe thechance of a rate cut in July is higher. What could prove decisive is next week’sMarch PMI figures. Judging by preliminary German PMIs, Swedish Manufacturingand Services PMI could both drop down a notch.
New NIER inflation forecasts showed that we are not the only ones arguing that theRiksbank has a long-term structural problem with too low inflation.
The SEK could see a test of 9.02 as flows remain a headwind for the SEK and asRiksbank cut expectations gains traction.
In Norway, focus turns to the retail sales, credit indicator, PMI and unemploymentdata.
Despite small changes to the rate path by Norges Bank last week, the announcementtook away an important risk factor for the NOK after the many dovish surprises seenin 2013. Hence, the recent move lower in EUR/NOK is fair and a further move lowerin the cross is likely if the ECB eases monetary policy this week as we expect. It alsoseems that the sentiment towards Norwegian government bonds has improved after10Y yields traded close to Irish yield levels before last week’s NGB tap.
In Denmark, it will be worth keeping an eye on the Nationalbank’s currency reservesdata for March due to be published on Wednesday. The krone is still relatively weakagainst the euro and has been trading as high as 7.4670 in the past week, a level thathas previously prompted the central bank to intervene.
Read the full report: FX Daily
Danske Bank