UK: Reform UK Records Highest YouGov Poll Support After Local Election Success

• CHF tops the G10 leaderboard on Monday, as the seismic hit to risk sentiment continues to bolster FX safe havens. This has once again been most notable in AUDCHF extending a three-day slide for the cross to 8.2%, with only the psychological 0.50 mark of note on the downside.
• Swissie strength has been broad based, with a near 1% advance against both the Euro and USD. EURCHF picked up downside momentum on a break back below 0.9500 Friday and now resides comfortably back below pre-German fiscal announcement levels. Weakness this morning took EURCHF to a fresh 2025 low below 0.9300, signalling scope for a more to firm double bottom support, at the 2024 lows around 0.9210.
• For USDCHF, price action last week to the pair below the US election lows, resulting in a resumption of this year’s downtrend. Note that moving average studies remain in a bear-mode position and this continues to highlight a dominant medium-term downtrend.
• Following the break of 0.8570 (76.4% retracement of the Sep ‘24 - Jan bull cycle), key medium targets include 0.8375 (Sep 6 '24 low) and 0.8333, the Dec 28 '23 low and the medium-term bear trigger.
• It is worth highlighting that Goldman Sachs have adjusted their 12m USDCHF forecast to 0.79 from 0.88.

• While the greenback received a moderate boost during the APAC session on the risk off flows, broad dollar indices have since turned lower, weigh by the likes of USDCHF and USDJPY, which have declined ~1% and ~0.5% respectively to start the week.
• Notably, Goldman Sachs have made significant downward revisions to their dollar forecasts over the next 12 months, as they cite the greenback’s exceptionalism as having been eroded. GS cite three major reasons for their decisive shift.
• First of all, the combination of an unnecessary trade war and other uncertainty raising policies is severely eroding consumer and business confidence. Secondly, the negative trends in US governance and institutions are eroding the exorbitant privilege long enjoyed by US assets. Finally, the implementation of the tariffs themselves is eroding the ability of investors to price these, underpinning the rising recession risks.
• GS have revised their EURUSD forecasts to 1.12, 1.15 and 1.20 in 3, 6 and 12 months (from 1.07, 1.05 and 1.02 previously) and revise their USDJPY forecasts to 138, 136, and 135 in 3, 6 and 12 months (from 150, 151 and 152 previously). GS believe this would bring the Dollar closer to measures of long-run fair value.

Although still a volatile release month-to-month, the recovery in Norwegian manufacturing industrial production extended in February, led by non-petroleum-related components. Overall, IP looks to be a positive contributor to Q1 mainland and headline GDP growth. 

• The prospect of increased European defence spending in the coming years should provide a medium-term tailwind to Norwegian industry, but still-restrictive policy rates may limit upside in the short-term. Additionally, headline IP may be weighed down by weaker global growth prospects, with crude oil and natural gas prices down sharply since last week’s US tariff announcements.
• The 16% US tariff on Norwegian imports shouldn’t have too much of a direct impact. Norwegian exports to the US only accounted for ~3.5% of total exports in the 12-months to February.
• February manufacturing industrial production rose 1.4% M/M (vs -1.6% in January), corresponding to a 6.1% Y/Y rate. On a 3m/3m basis, production rose 2.8% for the third consecutive rise from -1.7% in November.
• Headline IP rose 1.6% M/M and 2.3% 3m/3m, but was flat on an annual basis.