NORWAY: Downside surprise to headline CPI; question marks over August hike
- Headline CPI surprised by 0.4ppt to the downside at 2.7%Y/Y.
- Initial drivers appear to be "foods and non-alcoholic beverages" at 2.3%Y/Y (from 3.4%Y/Y), transport (1.7%Y/Y from 2.6%Y/Y), "Information and communication" (1.8%Y/Y from 5.7%), "Recreation, sport and culture (3.0% from 3.8%) and "Personal care, social protection and misc goods (-2.4%Y/Y from -1.5%).
- Regarding the "Information and communication" division - note that in the May release there was a surprisingly strong 13.5%M/M print in "08.1.3 Information processing equipment" - so this looks as though it may have been reversed.
- Overall, we would still describe this as a soft print and market pricing may well flip from being slightly in favour of an August hike to a slightly lower probability. However, we think the market will wait for the CPI-ATE release to reflect the full move.
- EURNOK now trades close to 11.12 from 11.10 pre-release, hitting an intraday high of 11.1219.
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BTP TECHS: (U6) Monitoring Support
- RES 4: 119.00 Round number resistance
- RES 3: 118.83 High May 29 and a bull trigger
- RES 2: 118.58 High Jun 2
- RES 1: 118.11 High Jun 3
- PRICE: 117.28 @ Close Jun 9
- SUP 1: 116.90 Low Jun 8
- SUP 2: 116.09 Low May 20
- SUP 3: 115.68 Low May 18 and a key short-term support
- SUP 4: 115.19 Low Apr 7
Medium-term trend conditions in BTP futures remain bearish and recent gains appear corrective. However, a short-term bull cycle is in play, signalling scope for a continuation higher. A resumption of gains would signal scope for a climb towards the 119.00 handle next. Initial key support to watch lies at 115.68, the May 18 low. Clearance of this level would highlight an important short-term bearish development.
USDJPY TECHS: Approaching Key Resistance
- RES 4: 161.46 1.618 proj of the Jan 27 - Feb - 12 price swing
- RES 3: 161.00 round number resistance
- RES 2: 160.72 High Apr 30 and the bull trigger
- RES 1: 160.45 High Jun 09
- PRICE: 160.26 @ 16:51 BST Jun 9
- SUP 1: 159.44 20-day EMA
- SUP 2: 158.85/157.32 50-day EMA / Low May 14
- SUP 3: 156.78 Low May 12
- SUP 4: 156.41 Uptrendline drawn off Apr’ 25 low
USDJPY is holding on to its latest gains and a bull cycle remains in play. Sights are on key resistance at 160.72, the Apr 30 high. A clear break of this hurdle would strengthen the uptrend. Note that a breach would also cancel an existing bear threat highlighted by the large bear candle on Apr 30 - it is still possible that the recovery since May 6 is a correction. Initial firm support is 158.85, the 50-day EMA. A break of it would signal a possible reversal.
SCANDIS: Norway Inflation Stronger Than Exp, Not Enough To Support June Hike
- May CPI-ATE inflation two tenths above consensus at 3.4% Y/Y (vs 3.2% prior), and one tenth above Norges Bank’s March MPR projection. At face value, it’s probably not enough to shift consensus for next week’s decision in favour of a hike, particularly with the important Q2 Regional Network Survey due tomorrow. More details on the inflation in due course.
- EURNOK has fallen ~0.2% since the data was released, now at 0.9750. However, the cross remains above prior resistance at the 50-day EMA. A consolidation above this average would be a bullish technical development, and point to an extension of the recent recovery.
- Elsewhere, Swedish April GDP was 0.5% M/M, above the median analyst forecast of -0.1% M/M. However, this median was formed of just four forecasts ranging between -0.9% - 1.6%. Given the volatility in the monthly data, it’s important not to read too much into this data for now.
