STIR: Markets Still Lean Towards 25bp BoE Cut Per Quarter Through Dec

• EUR/USD: $1.1600(E5.1bln), $1.1625(E1.2bln), $1.1640-50(E907mln), $1.1700(E3.2bln)
• USD/JPY: Y142.00($1.3bln), Y143.00($1.4bln), Y147.00($782mln)
• AUD/USD: $0.6500(A$2.4bln)
• NZD/USD: $0.6040(N$522mln)
• USD/CAD: C$1.3715-35($1.7bln), C$1.3800($2.0bln)

Weakening momentum in the Norwegian krone has extended today, despite more stable oil prices and unchanged 2-year swap rate differentials. That pulls NOKSEK down another 0.55%, with the cross on track for its fifth consecutive close lower and hovering just below support at 0.9374 (50% retracement of the April 9 – June 19 bull run). The 0.9300 handle provides the next downside target, aligning with the 61.8% retracement of the April-June rally. 

• EURNOK is up 0.4% at 11.8022, consolidating above all major moving averages. An impending cross of the 50- and 20-day EMAs should support recent bullish price action.
• Today’s Norwegian credit data and June Riksbank minutes were not market movers. Tomorrow’s Scandi data calendar includes the June Economic Tendency Indicator in Sweden and the May LFS unemployment rate in Norway. Both should be interesting releases, but note that the next Riksbank and Norges Bank meetings are not till mid-August.

Goldman Sachs note that through Tuesday, “the last eight trading sessions have seen opposing one-day moves in the USD and in SPX (either SPX up and USD down, or SPX down and USD up), which is the longest streak of that type so far this year”.

• This corresponds with the “1-month rolling beta of USD returns to SPX returns moving negative for the first time since early March”. Goldman partially attributes this to the “shift in the source of global growth and risk shocks away from the U.S., and toward rest of world (in this case mostly geopolitical developments in the Middle East)”.