SWEDEN: Notable Upside Surprise To January Flash Inflation
No details are provided in the Swedish flash CPI release, so its difficult to ascertain the driver of the stronger-than-expected readings. Both CPIF (2.2% Y/Y vs 1.6% cons, 1.5% prior) and CPIF ex-energy (2.7% Y/Y vs 2.1% cons, 2.0% prior) surprised significantly to the upside.
- The Riksbank had projected CPIF ex-energy at 2.4% Y/Y in the December MPR.
- SEK has knee-jerked stronger following the release, but moves have been modest. The January inflation reading is always more uncertain than usual, with forecasters needing to make assumptions on start-of-year price resets etc.
- More data – both on inflation and activity/labour market – is required to fully write-off a March Riksbank cut, even with the Executive Board adopting a more cautious stance going forward.
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Historical bullets
GILT TECHS: (H5) Trend Needle Points South
- RES 4: 93.87 Low Dec 16
- RES 3: 93.64 High Dec 17
- RES 2: 93.04 20-day EMA
- RES 1: 92.88 High Jan 2
- PRICE: 91.95 @ Close Jan 6
- SUP 1: 91.64 Low Dec 19 and the bear trigger
- SUP 2: 91.58 4.382 proj of the Dec 3 - 4 - 5 minor price swing
- SUP 3: 91.45 4.500 proj of the Dec 3 - 4 - 5 minor price swing
- SUP 4: 91.33 4.618 proj of the Dec 3 - 4 - 5 minor price swing
The trend condition in Gilt futures is unchanged, it remains bearish and recent short-term gains appear to have been corrective. The recent breach of 91.87, the Dec 19 low, confirmed a resumption of the downtrend. Sights are on 91.58 next, a 4.382 projection of the Dec 3 - 4 - 5 minor price swing. Initial resistance is at 92.08, the Jan 2 high. Resistance at the 20-day EMA, is at 93.16, and the average is seen as an important hurdle for bulls.
EURGBP TECHS: Resistance Remains Intact
- RES 4: 0.8448 High Oct 31 and reversal trigger
- RES 3: 0.8376 High Nov 19 and a bull trigger
- RES 2: 0.8356 High Nov 27
- RES 1: 0.8312/29 50-day EMA / High Dec 27
- PRICE: 0.8293 @ 07:04 GMT Jan 7
- SUP 1: 0.8263/23 Low Dec 31 / 19
- SUP 2: 0.8203 Low Mar 7 2022 and a major support
- SUP 3: 0.8200 Round number support
- SUP 4: 0.8188 1.00 proj of the Oct 31 - Nov 11 - 19 price swing
EURGBP remains in consolidation mode and continues to trade closer to its recent highs. Resistance at 0.8312, the 50-day EMA, has recently been pierced. A clear breach of the average would undermine the bear dominant theme and highlight a stronger reversal. A resumption of the primary downtrend would pave the way for a move towards major support at 0.8203, the Mar 7 ‘22 low and the lowest point of a multi-year range.
STIR: SFRZ6/Z7/Z8 Fly Sold
SFRZ6/Z7/Z8 fly ~2K given at 0.0
