NORWAY: No Massive Surprises In Nov CPI-ATE Report, Services Still Sticky
Overall, the Norwegian November inflation report did not contain much to push Norges Bank off its previously signalled cautious easing path. Although underlying CPI-ATE momentum is likely to ease in the coming months, services inflation remains too sticky for comfort. Focus turns to the Q4 Regional Network Survey tomorrow.
- On a seasonally adjusted basis using Stats Norway data, Norwegian CPI-ATE inflation rose 0.15% M/M. That follows 0.45% M/M last month and 0.15% the two months prior. 3m/3m annualised momentum was essentially unchanged at 2.81%, but recent sequential readings suggest a moderation is likely in the coming months.
- A pullback in goods and food inflation were key drivers of the NSA CPI-ATE print. These dynamics were largely expected by analysts following a strong October.
- Food inflation fell back to 4.66% Y/Y (vs 6.16% prior), a year-to-date low.
- Domestic goods excluding energy and agricultural products also eased to 3.34% Y/Y (vs 4.92% prior). Similarly, imported goods ex agricultural products fell to 0.95% Y/Y (vs 1.43% prior). Disinflation was noted in furniture and household appliances and an array of recreation and culture goods components.
- Services meanwhile remained elevated at 3.79% Y/Y (unch versus last month). Rents were steady at 3.72% Y/Y while services ex-rent ticked up slightly to 3.92% (vs 3.83% prior). A pullback in accommodation services was offset by restaurants (5.05% Y/Y vs 2.98% prior), but recreation and cultural services displayed a more notable easing (3.76% Y/Y vs 4.22% prior).
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FOREX: Antipodeans & NOK Outperform, JPY Lags
The broader USD (BBDXY) operates in the bottom half of Friday’s range as equities rally.
- This comes after a group of Democratic Senators broke ranks and agreed a deal with the GOP re: ending the U.S. government shutdown. Official Senate passage and House approval of the legislation is still required.
- Some may perceive the deal to be USD-negative as it moves us closer to the resumption of U.S. data releases, which could increase odds of Fed easing.
- Risk-sensitive AUD & NZD outperform against this backdrop.
- AUD received further tailwinds from hawkish RBA comments.
- AUD/USD extends the recovery from month-to-date lows, last 0.6533. Immediate resistance of note at the 50-day EMA (0.6538), albeit with the bearish technical setup remaining intact at this stage.
- Elsewhere, the NOK benefits from the risk-positive backdrop and firmer-than-expected domestic CPI data detailed in recent bullets. We had already noted that a December cut from the Norges Bank seemed very unlikely at this stage, and the prospects of such a move are set to fall back even further in the wake of the data.
- EUR/NOK has extended the pullback from 11.80, potentially forming a double top pattern multi-week.
- JPY the underperformer, with USD/JPY back above 154.00. Technicals remain bullish USD/JPY, with the November 4 high and bull trigger located at 154.48.
- Comments from Fed’s Daly & Musalem, as well as BoE’s Lombardelli, headline a limited G10 calendar today.
EQUITY TECHS: E-MINI S&P: (Z5) Doji Reversal Candle
- RES 4: 7000.00 Psychological round number
- RES 3: 6993.12 3.500 proj of the Aug 20 - 28 - Sep 2 price swing
- RES 2: 6974.04 3.382 proj of the Aug 20 - 28 - Sep 2 price swing
- RES 1: 6857.75/6953.75 High Nov 5 / High Oct 30 and the bull trigger
- PRICE: 6801.50 @ 07:27 GMT Nov 10
- SUP 1: 6655.70 Low Nov 7 and key short-term support
- SUP 2: 6571.25 Low Oct 17
- SUP 3: 6540.25 Low Oct 10 and a key support
- SUP 4: 6476.62 23.6% retracement of the Apr 7 - Oct 30 bull cycle
The trend condition in S&P E-Minis remains bullish and the pullback since the Oct 30 high appears corrective. The contract has managed to find support below the 50-day EMA, currently at 6710.28 and a key support. Friday’s activity also highlights a potential reversal signal - a bullish doji candle. This defines key support at 6655.50, the Oct 7 low. A continuation higher would signal the end of a correction and open 6953.75, the Oct 30 high and bull.
WTI TECHS: (Z5) Bullish Short-Term Price Pattern
- RES 4: $71.47 - High Jun 23 and a key medium-term resistance
- RES 3: $67.68 - High Jul 30
- RES 2: $65.77/68.43 - High Sep 26 and key resistance
- RES 1: $62.59 - High Oct 24
- PRICE: $60.22 @ 07:19 GMT Nov 10
- SUP 1: $58.83/55.96 - Low Nov 6 / Low Oct 20 and bear trigger
- SUP 2: $54.85 - Low May 5
- SUP 3: $54.16 - Low Apr 9 and a key support
- SUP 4: $53.23 - 1.764 proj of the Jul 30 - Aug 13 - Sep 26 price swing
Recent weakness in WTI futures appears to be a flag formation - a bullish continuation pattern. This suggests that a bullish corrective cycle remains intact for now. Price has recently traded through the 50-day EMA, at $60.87, signalling scope for a stronger recovery. Note too that resistance at $62.34, the Oct 8 high, has been pierced. A clear move through it would expose key resistance at $65.77, Sep 26 high. The bear trigger is $55.96, the Oct 20 low.
