NORWAY: June CPI: Surprise Unlikely To Shift Norges Bank Cut Expectations

Jul-10 05:50

Norwegian June inflation is due at 07:00BST / 8:00CET. Consensus and the Norges Bank see CPI-ATE at 3.6% Y/Y (vs 4.1% prior).

  • Following the more hawkish than expected June Norges Bank decision, current consensus is split between a first rate cut in December ‘24 (which would be dovish relative to the Norges Bank’s June rate path) and March ‘25 (more consistent with the rate path).
  • We think that any surprise to CPI-ATE this morning will need to be taken alongside the July inflation data (due August 9) before meaningfully altering market expectations for the first cut.
  • Nonetheless, a higher-than-expected reading would see the 20-day EMA at 11.4373 in EURNOK as the first support, with initial resistance at 11.5679 (50% retracement of the May 1 – June 21 sell-off).
  • Looking at the breakdown of the Bloomberg consensus, Danske Bank expect a 3.5% Y/Y CPI-ATE reading while Citi (3.7% Y/Y) and DNB (3.8% Y/Y) hold above-consensus views. See below for DNB and SEB’s commentary ahead of the release:

Historical bullets

EURGBP TECHS: Impulsive Break Lower

Jun-10 05:49
  • RES 4: 0.8621 High May 9 and a key short-term resistance
  • RES 3: 0.8593 1.0% 10-dma envelope
  • RES 2: 0.8541 High May 31
  • RES 1: 0.8525 20-day EMA
  • PRICE: 0.8555 @ 06:48 BST Jun 10
  • SUP 1: 0.8454 76.4% of the Mar 7 - Sep 26 ‘23 bull phase
  • SUP 2: 0.8408 Low Aug 24 2023
  • SUP 3: 0.8388 Low Aug 17 2022
  • SUP 4: 0.8366 2.236 proj of the Apr 23 - 30 - May 9 price swing

EURGBP has started the week on a bearish note and has cleared support at 0.8484, the May 29 low and bear trigger. This confirms a resumption of the downtrend and signals scope for a continuation lower near-term. Sights are on 0.8408 next, the Aug 24 ‘23 low. 0.8453, the 76.4% retracement of the Mar 7 ‘22 - Sep 26 ‘22 bull cycle has been tested, a break would reinforce the bearish theme. Resistance is at 0.8525, the 20-day EMA.

EUROZONE T-BILL ISSUANCE: W/C June 10, 2024

Jun-10 05:41

Germany, France, Spain, Belgium and Italy are all due to sell bills this week. We expect issuance to be E22.2bln in first round operations, down from E24.1bln last week.

  • This morning, Germany will look to sell E2bln of the 3-month Sep 18, 2024 bubill and E2bln of the 9-month Mar 19, 2025 bubill.
  • This afternoon, France will come to the market to sell up to E7.5bln of 13/14/26/49-week BTFs. On offer will be E3.2-3.6bln of the new 13-week Sep 11, 2024 BTF, E0.2-0.6bln of the 14-week Sep 18, 2024 BTF, E1.4-1.8bln of the 26-week Dec 11, 2024 BTF and E1.1-1.5bln of the 49-week May 21, 2025 BTF.
  • Tomorrow morning, Spain will look to sell the 3-month Sep 6, 2024 letras and the 9-month Mar 7, 2025 letras. Details on size to be confirmed today.
  • Also tomorrow morning, Belgium will look to issue an indicative E1.2bln (E1.0-1.4bln) of the 11-month May 8, 2025 TC.
  • Finally, on Wednesday, Italy will come to the market to sell E7.5bln of the new 12-month June 13, 2025 BOT.

For more on future auctions see the full MNI Eurozone/UK T-bill auction calendar here.

SCHATZ TECHS: (U4) Bearish Trend Structure

Jun-10 05:32
  • RES 4: 105.625 High May 17
  • RES 3: 105.572 76.4% retracement of the May 15 - 24 bear leg
  • RES 2: 105.484 61.8% retracement of the May 15 - 24 bear leg
  • RES 1: 105.460 High Jun 4 and key short-term resistance
  • PRICE: 105.215 @ 06:15 BST Jun 10
  • SUP 1: 105.175 Low Jun 7
  • SUP 2: 105.110 Low May 24 and the bear trigger
  • SUP 3: 105.000 Round number support
  • SUP 4: 104.855 1.00 projection of the May 15 - 24 - Jun 4 price swing

The trend condition in Schatz futures remains bearish and recent short-term gains are considered corrective. Moving average studies are in a bear-mode set-up, highlighting bearish market sentiment. Resistance to watch is 105.460, the Jun 4 and 5 high. For bears, a continuation lower would refocus attention on key support and the bear trigger at 105.110, the May 24 low. A break would resume the downtrend.