NOK: EURNOK Rally Stalls At 12.000, Hawkish Risks To Norges Bank Decision
Dec-17 12:19
EURNOK’s impressive rally since last Thursday’s soft Regional Network survey has stalled at the 12.0000 figure. Although we expect a dovish revision to Norges Bank’s December MPR rate path tomorrow, recent price action suggests NOK FX will be more sensitive to a smaller-than-expected downward revision relative to September.
- If Norges Bank’s decision is interpreted as less dovish expected, initial downside focus in EURNOK will be on the prior breakout level of 11.8612 (Nov 25 high). This level shields the 20-day EMA at 11.8123.
- Overnight EURNOK implied vols are well bid with the ECB decision also due tomorrow, currently at the highest since late October. That pushes the breakeven on an overnight ATM straddle expiring at tomorrow’s NY cut to around 0.45%.
- Norges Bank’s decision is due at 0900GMT/1000CET, just 30 minutes after the Riksbank.
- See our previews for tomorrow’s Scandi decisions here:
Figure 1: EURNOK Since June 2023 (Source: Bloomberg Finance L.P)
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OUTLOOK: Price Signal Summary - Corrective Cycle In Gilts
Nov-17 12:18
- In the FI space, a strong sell-off in Bund futures last week reinforces the current bearish condition and the contract is trading closer to its cycle lows. Price has pierced 128.52, the 76.4% retracement of the Sep 25 - Oct 17 bull leg. A clear break of this handle would signal scope for an extension towards 128.25, the Oct 7 low. Key short-term resistance is seen at 129.40, last Thursday’s high. Clearance of this hurdle would signal a reversal. First resistance is 128.80, the Nov 10 low.
- Gilt futures gapped sharply lower on Friday. For now, a move down is considered corrective and the next key support to watch lies at 91.82, the Sep 11 high and a former key breakout level. Moving average studies remain in a bull-mode position, highlighting a dominant uptrend. First resistance to watch is 92.85, the Nov 14 high. On the downside, a break of 91.82, the Sep 11 high, would strengthen a bear theme.
EQUITY OPTIONS: Huge Commerzbank Option trade
Nov-17 12:01
CBK (18/12/26) 17p vs (18/06/27) 24p, trades 2.6 in 65k for the 2027.
US TSYS: Extending Highs
Nov-17 11:53
- Treasury futures extended the top end of the overnight range in the last 5 minutes, Dec'25 10Y tapped 112-24 before trading back to 112-23 (+6), 10y yield slips to 4.1173% low (-.0310).
- Treasuries last week challenged resistance at the 113-02 level, an area of congestion since Nov 5. This hurdle remains intact, however, a clear move above it would be a bullish signal and shift focus on resistance at 113-18+, the Oct 28 high. A break would also cancel a short-term bearish theme.
- The German 10Y Bund gained as well - but remains off overnight highs, Bbg US$ index firmer at 1217.70 (+1.42), stocks mildly higher (SPX eminis +19.75 at 6,775.00).
