NORWAY: DNB See NOK / Oil Correlation Re-Establishing Itself in 2023
Feb-09 11:16
- Of note considering today's volatility in Scandi currencies - DNB write that they do not see the signs of a disconnect between NOK valuation and oil&gas prices, and expect the correlation to return to historical norms this year.
- They write that the disconnect in 2022 was due to breakdown in relative pricing between gas and oil (with gas making up close to 50% of Norway's petroleum export volume) and a misalignment in the petroleum fund mechanism for currencies I.e. Net NOK purchases were misaligned with fiscal needs due to the lag between MoF updates and the fluctuation in daily energy prices.
- These flows should net to zero over time, helping the NOK / oil correlation re-settle this year, with a MoF review of the government's liquidity management to further smooth the impact of petroleum-related NOK transactions.
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OUTLOOK: Price Signal Summary - EURUSD Uptrend Remains Intact
Jan-10 11:15
- In FX, a strong recovery extended Monday in EURUSD, confirming the end of the recent corrective pullback. The bull trigger at the Dec 15 high at 1.0735, has been cleared and this confirms a resumption of the uptrend. The break maintains the bullish price sequence of higher highs and higher lows and note that MA studies are in a bull-mode position. The focus is on 1.0787, the May 30, 2022 high. Key support has been defined at 1.0484, the Jan 6 low.
- GBPUSD traded higher Monday, adding to Friday’s strong bounce. The recovery from Friday’s low of 1.1842 highlighted an early reversal and yesterday’s follow through reinforces the signal that highlights the end of the recent bear cycle between Dec 14 - Jan 6. Sights are on 1.2242 next, Dec 19 high. Key support is at 1.1842, the Jan 6 low.
- USDJPY remains below Friday’s high of 134.77. The pullback and weak close on Friday, reinforces a bearish theme and suggests that recent gains have been a correction. The key support and trigger for a resumption of the trend is 129.52, Jan 3 low. Initial key short-term resistance has been defined at 134.77.
LOOK AHEAD: Tuesday Data Calendar: Fed Chair Powell Riksbank Event
Jan-10 11:13
- US Data/Speaker Calendar (prior, estimate)
- Jan-10 0600 NFIB Small Business Optimism: 89.8 reported vs 91.5 est
- Jan-10 0900 Fed Chair Powell on CB independence, Riksbank event
- Jan-10 1000 Wholesale Trade Sales MoM (0.4%, 0.2%)
- Jan-10 1000 Wholesale Trade Trade MoM (1.0%, 1.0%)
- Jan-10 1300 US Tsy $40B 3Y Note auction
EUR: EURAUD targets last Thursday's high
Jan-10 11:11
- EUR leads against the Aussie this morning, now at session high, up 0.42%.
- EURAUD eye last Thursday's high at 1.56175.
