EMISSIONS: Dutch Reports 50MN Tonnes CO2e Under EU ETS 2

SEK underperforms the G10 basket alongside NZD, with EURSEK moving back above the 200DMA and narrowing the gap to resistance at 11.2784 (Jul 7 high). Initial support is last Thursday’s low of 11.1133.

• EURSEK has tracked movements in swap rate differentials fairly closely since March. The 2-year EUR-SEK swap differential is currently -1.7bps, up from a close of -8.4bps last Monday (following the stronger-than-expected Swedish flash June CPI report).
• Movements over the past week have been driven by the EUR leg, with the 2-year EUR swap rate rising from 1.88% to 1.94% and SEK swaps remaining around 1.96%.
• This morning’s final Swedish June inflation report brought a one tenth downward revision to CPIF ex-energy on a rounded basis to 2.8% Y/Y. However, this represented a revision of just -0.01pp.
• Renewed tariff fears following US President Turmp’s 30% EU tariff threat over the weekend could be contributing to some SEK underperformance. Although European equity futures are off session lows, they remain -0.3% today. 
• A reminder that – like NOK – liquidity in SEK markets tends to dry up during the summer months with many participants on holiday, which can exacerbate intraday volatility. 

• A phase of selling pressure tilts GBP to new pullback lows, pressuring GBP/USD to 1.3447 on generally very light volumes. No specific newsflow or headlines behind the move. The Times reported that Chancellor Reeves is "poised to force firms to pay more into staff pensions" - a concept that, while not new, would add to pressure on smaller firms already pressured by the increase in employers' NICs in last year's budget, adding to the downside risk to the UK jobs market this year.
• Consequently, EUR/GBP has broken and cleared above the early July high - putting the cross at the best levels since early April and narrowing the gap with 0.8738 in the process. The bull trigger above remains 0.8738, the 2025 high and near-term upside target.
• BoE's Bailey flagged the MPC's potential responsiveness to further jobs declines in his interview with The Times earlier: "The Bank of England is ready to make larger cuts to interest rates if the jobs market shows signs of a pronounced slowdown", adding that there was “consistent” evidence of businesses “adjusting employment” after Rachel Reeves increased employers’ national insurance contributions (NICs).

SFIZ5 96.80/97.00 call spread, bought for 1.5 in 23.075k