NORGES BANK: MNI Norges Bank Preview: Jan 26 - More Focus On March Decision
Jan-20 12:14
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EXECUTIVE SUMMARY:
- Norges Bank is firmly expected to hold the deposit rate at 4.00% on Thursday. This will be an interim decision where only a concise update of economic conditions will be presented, and not an updated MPR or rate path projection.
- Norges Bank rarely makes material guidance changes at these interim decisions, and the limited domestic developments since the December meeting warrant a continuation of the Board's cautious approach to easing. If anything, the risks appear tilted towards marginally hawkish guidance tweaks
- CPI-ATE inflation was a tenth higher than expected at 3.1% Y/Y in December, and the registered unemployment rate fell back below Norges Bank’s projections. The modest strengthening in the I-44 effective exchange rate since the last meeting shouldn't have a material impact on deliberations. Meanwhile, it is too early to take policy signals from recent volatility in crude oil and natural gas markets. The March decision will attract much more attention, with Norges Bank having received more details on inflation, output, the labour market and 2026 union wage negotiations to assess the appropriate policy stance.
- The median analyst looks for two 25bp cuts this year to 3.50%, but the range of forecasts remains wide. Dovish analysts look for three cuts in 2026, while others look for one or even no cuts.
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AUSSIE 10-YEAR TECHS: (H6) Marked Lower
Dec-19 23:15
- RES 3: 95.982 - 76.4% retracement Sep’24 - Nov’24 downleg
- RES 2: 95.960 - High Apr 7 (cont.)
- RES 1: 95.900 - High Oct 17
- PRICE: 95.160 @ 15:32 GMT Dec 19
- SUP 1: 95.120 - Low Dec 10
- SUP 2: 95.087 - 2.0% Lower Bollinger Band
- SUP 3: 94.276 - 1.0% 10-dma envelope
Aussie 10-yr futures remain well toward the bottom of the recent range, having taken out all major support levels in the process. With 95.275 cleared, prices are pushing to new contract lows, opening vol-band support through 95.087 and into 94.276. Any recoveries need to break back above 95.900 to signal near-term bullish traction.
AUDUSD TECHS: Corrective Phase Still In Play
Dec-19 21:00
- RES 4: 0.6759 High Oct 11 ‘24
- RES 3: 0.6723 High Oct 21 ‘24
- RES 2: 0.6707 High Sep 17 and a key resistance
- RES 1: 0.6661/86 High Dec 16 / 10
- PRICE: 0.6608 @ 15:56 GMT Dec 19
- SUP 1: 0.6593 Low Dec 18
- SUP 2: 0.6566 50-day EMA
- SUP 3: 0.6517 Low Nov 27
- SUP 4: 0.6466/21 Low Nov 26 / 21
The trend condition in AUDUSD remains bullish and the latest pullback appears corrective. The move down is allowing a recent overbought condition to unwind. Support at the 20-day EMA, at 0.6598, has been pierced. The 50-day average is at 0.6566. The area between the two averages represents a key short-term support zone. A resumption of gains would refocus attention on key resistance at 0.6707, the Sep 17 high and bull trigger.
LOOK AHEAD: US Macro Week Ahead: Long-Awaited Q3 GDP Plus Labor Updates
Dec-19 21:00
- The week ahead sees a slimmed down data schedule after a particularly busy few weeks, including distorted NFP and CPI reports in the week just gone. There are still some important releases though, with the highlight being the long-awaited “initial” Q3 GDP release on Tuesday.
- This report will replace what would have been the second GDP and the preliminary corporate profits estimates, with the extended tracking window of the Atlanta Fed’s GDPNow pointing to strong real GDP growth of 3.5% annualized after an average 1.6% in 1H25 (-0.65% in Q1 before 3.84% in Q2).
- Expect continued close attention on private demand, best seen by Powell’s preferred PDFP category, which is currently tracking at ~2.4% annualized for similar to the 2.4% averaged in 1H25 (1.9% Q1 before 2.9% in Q2).
- Tuesday also sees updates for the weekly ADP tracker in the four weeks up to Dec 5, getting closer to the reference period for the monthly report, after last week’s further improvement. It’s followed by useful updates for Q4 GDP tracking with durable goods for October and industrial production for both October and November, before the Conference Board consumer survey for December with its closely watched labor differential having stalled at subdued levels but not deteriorated further since September.
- Note as well that Wednesday then sees weekly jobless claims a day early ahead of Christmas Day, with continuing claims capturing the December payrolls reference period. There is currently minimal Fedspeak scheduled and we suspect this will remain the case ahead of Christmas, likely confined to media appearances if any.
