In Sweden, March retail will be released today and we expect sales to performaround the same moderate pace seen for the past several months. The mostinteresting data, however, is the consumer and business sentiment surveys by NIERand the PMI on Friday.
Riksbank minutes supported our call for a July rate cut and relative rates could stillweigh on the SEK in the spring.
We expect Norwegian retail sales to climb 0.3% m/m in March, resulting in thestrongest quarterly growth for a year. This would remove even more of the downsiderisk to the Norwegian economy, but as usual the timing of Easter makes the Marchand April data very uncertain.
Norway will on Tuesday hold an auction in the NGB May 2021 bond – the spread toGermany is still at a very high level and the absolute level is significant relative toEU peers. Hence, we expect to see decent demand at the auction as we saw at therecent 10Y auction.
Last week Danmarks Nationalbank surprised by increasing the rate on certificates ofdeposits by 15bp to 0.05%, thereby effectively ending the period of negative rates inDenmark, which has lasted since July 2012. On Friday, April’s currency reservefigures are published and the interesting part will be how much intervention it tookto trigger the rate hike.
The annualised 1M carry on a long EUR/DKK position is still well above 30bp.Hence, if you believe that the negative DKK carry will weigh on DKK and that theDanish central bank will allow EUR/DKK to move back towards the 7.4660-levelbefore intervening in the market again, it makes very good sense to be longEUR/DKK in the FX forward market.
Read the full report: FX Daily
Danske Bank