NOK: Finding Support From Rate Differentials; RNS Keeps Sep Decision Tight
Sep-11 10:16
NOK is finding support from rate differentials this morning, with the krone modestly outperforming the G10 basket. NOKSEK is up 0.3% and on track for its fourth consecutive positive session, with higher highs and higher lows a theme through the week.
- Key resistance to watch in NOKSEK is the 0.9500 handle, which has historically been an important pivot for the cross. This shields trendline resistance drawn from the March 2022 high, which intersects at 0.9544 today.
- 2-year NOK swap rates are up another 6bps to 3.91%, now up 13bps over the past two sessions and back in line with Sep 3 levels. In contrast, 2-year SEK swap rates are up 3.5bps on the session.
- Following today’s Q3 Regional Network Survey, we continue to believe that next week’s Norges Bank decision is a very close call. While not overtly hawkish, the survey doesn’t portray an economy that is in urgent need of lower rates.
- Norges Bank’s guidance to cautiously normalise policy remains intact, but its worth remembering that Governor Wolden Bache has stressed that the Junne MPR rate path is consistent with “one or two” more cuts this year. Taken alongside yesterday's stronger-than-expected CPI-ATE inflation reading, we think the balance of risks currently tilts towards one, rather than two, more cuts in 2025.
- That keeps a September hold and a December cut as a potential outcome for the rest of this year.
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EQUITIES: The EU Tech Index is through the August low
Aug-12 10:15
- The Tech index (SX8P) is the worst performer, down 1.8%, and is now through the August low, but not much spillovers into the US Nasdaq.
- As mentioned on the European Open, while President Trump announced further delay in Tariffs against China for another 90 days, earlier headline that China was urging companies to avoid NVIDIA H20 Chips, is helping keep some pressure in Tech.
- Next support in SX8P comes at 777.00.
UK DATA: MNI UK Labour Market Review: August 2025 Release
Aug-12 10:07
- The August UK labour market release was on balance stronger-than-expected, with 3m/3m employment growth surprising to the upside and the unemployment rate holding steady despite some risks of a one tenth increase.
- However, private sector regular pay data remains consistent with the idea that wage growth is slowing. Meanwhile, data such as vacancies, RTI-PAY payrolls and other labour market metrics/surveys point to more subdued developments than the headline LFS figures suggest.
- We have argued that a continually softening labour market is a necessity for another quarterly cut in November. The August release was worth a modest hawkish reaction in BOE implied pricing, but there’s still far too much data (on both inflation and the labour market) to come before excluding a November cut. OIS markets currently price ~11bps of easing through that meeting.
FINLAND AUCTION RESULTS: 3.00% Sep-35 / 0.25% Sep-40 RFGBs
Aug-12 10:05
| 3.00% Sep-35 RFGB | 0.25% Sep-40 RFGB | |
| ISIN | FI4000587415 | FI4000440557 |
| Amount | E797mln | E702mln |
| Previous | E780mln | E351mln |
| Avg yield | 3.050% | 3.411% |
| Previous | 3.011% | 3.033% |
| Bid-to-cover | 1.73x | 1.83x |
| Previous | 1.86x | 1.34x |
| Avg Price | 99.57 | 63.20 |
| Pre-auction mid | 99.360 | 63.059 |
| Prev avg price | 99.91 | 65.33 |
| Prev mid-price | 99.721 | 65.347 |
| Previous date | 20-May-25 | 24-Oct-24 |
Source: Bloomberg Finance L.P.
