OUTLOOK: Price Signal Summary - Gold Bulls Remain In The Driver's Seat

NOK is second only to the USD in today’s G10 leaderboard, with a near-2% rally in Brent crude futures underpinning today’s strength. EURNOK is now down 1.1% this week at 11.6374, and almost 3% since August 20. 

• Today’s EURNOK selloff narrows the gap to support at 11.6270 (61.8% retracement of the June to August rally), clearance of which would expose an historical pivot level around 11.6000.
• Our commodities team highlight that Russian supply fears remain a key support driver of crude prices, alongside strikes on Russian energy infrastructure over the last month. Meanwhile, Oil product strength in Europe has added support to crude as Shell announced a 2-month maintenance period at its Pernis refinery.
• This week’s Norwegian macro calendar is relatively light, with only Q2 current account and July industrial production data due.  There will be much more focus on next week’s heavy schedule, which includes the General Election (Monday), August inflation data (Wednesday) and the Q3 Regional Network Survey (RNS, Thursday).
• The election result doesn’t look likely to have a major impact on the fiscal (and hence Norges Bank) outlook, with much more interest in the inflation and RNS data.
• While analysts generally still lean in favour of 25bp cuts in September and December, we think the risk of a September hold may be somewhat underappreciated. Norges Bank have been clear in guiding for “one or two” more cuts this year, and a hawkish set of figures next week could tempt the board into another cautious rate hold, particularly after the solid Q2 GDP report released a few weeks ago. 

• On the commodity front, Gold traded sharply higher earlier as the metal extends its bull cycle. Today’s gains have resulted in breach of key resistance at $3500.1, the Apr 22 high, and delivered a fresh all-time high. This confirms a resumption of the primary uptrend and an extension of the sequence of higher highs and higher lows. The next objective is $3547.9, a 1.764 projection of the Feb 28 - Apr 3 - Apr 7 price swing. Initial firm support to watch lies at $3381.8, the 20-day EMA.
• In the oil space, a bear cycle in WTI futures remains intact and recent gains are considered corrective. This short-term corrective cycle remains in play and today’s rally reinforces this theme. Initial resistance to watch is $66.56, the Aug 4 high. Key short-term resistance has been defined at $69.36, the Jul 30 high. Clearance of this level would cancel a bear theme. A resumption of weakness would pave the way for a move towards $57.71, the May 30 low.

• Lithuania's issuance plan for 2025 sees a E6.0bln Eurobonds issuance target. E2.0bln was raised at syndication in January (dual-tranche 5/15-year) and we calculate just under E1.2bln has been sold at auction.
• This leaves E2.0bln as our expected size (split equally between the two tranches). We see two-way risks to this (towards either E1.5bln or E2.5bln).