SCANDIS: NOKSEK Reverses Course Following Rate Decisions
Wrapping up this morning’s Scandi decisions, the Riksbank was broadly in line with expectations while Norges Bank was on balance more hawkish than expected. After falling 0.3% this morning, NOKSEK has reversed course and now sits +0.15% on the session at 0.9130.
- A bearish technical trend in NOKSEK remains intact for now though, with rallies short of the 20-day EMA at 0.9244 considered corrective.
- Norges Bank made a smaller downward revision to its December MPR rate path than expected, pulling EURNOK down 0.25% to 11.9498. Initial support is the prior breakout level of 11.8612 (Nov 25 high). 2-year NOK swap rates are now up 5bps on the session, back at 4.00%.
- Meanwhile, 2-year SEK swap rates are down 2bps to 2.20%. Although analysts had expected the first three quarters of the December MPR rate path to remain at 1.75%, the lack of endorsement for market pricing (around a ~75% implied probability of a hike by end-2026) may be having some marginal dovish readthrough. EURSEK is off session lows, but still down 0.1% today.
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EURIBOR OPTIONS: Call Spread vs Put
ERH6 98.12/98.25cs vs 97.9375p, bought back the put for 1.25 in 3.5k.
CANADA: Gov't Secures Budget Passage w/Little Appetite For Snap Election
PM Mark Carney secured passage of the first federal budget of his tenure on 17 Nov. This was by a two-vote margin, and only thanks to the backing/abstention of opposition MPs. The budget passed with 170 votes in favour to 168 against, with Carney's centre-left Liberal Party of Canada (LPC) being joined by the sole environmentalist Green MP, Elizabeth May, in supporting the package.
- Even with May's support, if all other opposition MPs had voted against the budget, it would have been enough to defeat it. Given that federal budget votes are deemed confidence motions, this would have sparked a snap federal election. Instead, two MPs from the main opposition centre-right Conservatives (CPC) and two from the left-wing New Democratic Party (NDP) abstained on the vote.
- While the margin of victory may seem slim, there appears to be little desire from many parties in parliament for an early election.
- Carney is still looking to establish himself as a national leader after taking over from PM Justin Trudeau in April, and the pressure on the economy from US tariffs makes it an inopportune time for an election.
- CPC leader Pierre Poilievre is still smarting from a disastrous election campaign, where Poilievre lost his seat, and the defection of Chris d’Entremont to the LPC. Poilievre faces an internal review of his leadership in January, amid record-low personal approval ratings.
- The NDP's collapse in April was so severe that it lost official party status in the Commons, and is in the first stages of a rebuild amid an ongoing leadership contest.
- While there will be at least one other opportunity for a confidence vote in 2025 before the House rises on 12 Dec (a vote on approving day-to-day departmental spending). However, it looks as though, despite external headwinds, the political environment will remain relatively stable in the short-to-medium term.
Chart 1. Federal Budget Vote in House of Commons 17 November 2025
Source: CBC, MNI. N.b. Black dot indicates non-voting Speaker. Dots on right indicate abstentions.
FOREX: FX OPTION EXPIRY
Of note:
EURUSD 1.41bn at 1.1675 (It looks too far).
EURUSD 1.25bn at 1.1600 (wed).
USDJPY 1.35bn at 155.00 (thu).
USDZAR ~1.3bn at 17.2000/17.2800 (thu).
AUDUSD 2.28bn at 0.6550 (fri).
- EURUSD: 1.1600 (488mln), 1.1605 (457mln), 1.1630 (578mln), 1.1675 (1.41bn).
- USDJPY: 155.00 (240mln), 155.50 (528mln).
- AUDUSD; 0.6400 (918mln), 0.6500 (318mln), 0.6600 (729mln).
- EURSEK: 10.9500 (319mln).
- EURNOK: 11.7500 (494mln).
