FOREX: Greenback Through Support, GBP Still Primary Beneficiary

Swedish seasonally adjusted core inflation momentum eased in June despite the NSA upside surprise to the Riksbank’s June MPR projection. While the chance of an August Riksbank cut has certainly fallen following the print, it cannot be fully ruled out yet. There is still another inflation print due on August 7 (flash, final on 14th) before the August 20 decision and even then, weak growth data may tilt the Executive Board in favour of further easing. 

• MNI’s 3m/3m seasonally adjusted annualised inflation measure fell below 3% for the first time this year at 2.90% (vs 3.14% prior). However, other annualised seasonally adjusted measures did move higher alongside spot NSA rates.
• Splitting apart CPIF ex-energy, we calculate 3m/3m services momentum little changed at 2.75% (vs 2.77% prior), while core goods momentum was weak at -0.41% (vs 0.20% prior). Core goods momentum may rebound next month though, when January’s 1.04% M/M reading falls out of the 3m/3m calculation.
• Turning back to Y/Y NSA rates, the proportion of sub-components with annual rates between 1-3% Y/Y (i.e. broadly target consistent) ticked up to 21% from 20% in May and 17% in April. 63% of components had annual inflation rates below 3% in June, unchanged from May. 

MNI looks at the BOJ's internal policy calculations. -- On MNI Policy MainWire now, for more details please contact sales@marketnews.com

Citi recommend 10-/30-Year BTP flatteners boxed vs. Bunds or RAGBs.

• They suggest ongoing long-end BTP demand (expectations for foreign demand persistence amid calm politics and primary budget surpluses, calling for a lower risk premium) and limited supply should help flatten the BTP curve.