EU FINANCIALS: Société Générale $1bn WNG PerpNC10 AT1 - FV

SEK strength noted over the past hour, picking up in recent trade, with the krona now outperforming the G10 basket ahead of AUD. No obvious headline trigger for the move, which helps spot narrow the gap to support at 10.8815 (Oct 24 low). 

• Recent domestic data has suggested an economic recovery is taking hold, and this has been reflected in a bear steepening of SEK rates curves (which now almost fully price a hike back to 2% by the end of next year). This repricing has supported modest SEK strength since the end of November, and EURSEK is looking to breakout of the 10.90-11.10 range that had contained price action over the past 3 months.
• The medium-term risk in NOKSEK remains biased to the downside, with spot consolidating below prior support at 0.9324 (Sep 5 low). Downside targets appear scant until the ~0.9200 figure.
• Note that Swedish annual pension fund disbursements (‘PPM flows’) began from yesterday. These flows have historically generated temporary SEK weakness, but do not appear significant at present. We wrote last week that the PPM flow effect has moderated (and in some cases been immaterial) in recent years.
• This week’s Scandinavian calendar is headlined by Norwegian November CPI tomorrow and the Q4 Norges Bank Regional Network Survey on Thursday. Swedish October activity data, final November inflation and November labour market data may also generate some interest. These will be the last data inputs ahead of next week’s Riksbank and Norges Bank decisions, which include an updated MPR and rate path projection. 

From a cross-market perspective, the pullback from session highs in European equity benchmarks is providing some support for wider core global FI markets. Little in the way of meaningful macro news flow seen to help explain the move.

FX OPTION EXPIRY: Large Expiry in the EUR on Thursday.

Of note:

AUDUSD 1.33bn at 0.6630/0.6635.

EURUSD 2.31bn at 1.1590/1.1615 (a bit far).

EURUSD 6.53bn at 1.1595/1.1610 (thu).

USDJPY 1.77bn at 156.00 (thu).

USDCNY 1.2bn at 7.1088 (wed).

• EURUSD: 1.1590 (1.14bn), 1.1600 (755mln), 1.1615 (418mln), 1.1675 (784mln).
• USDJPY: 155.50 (665mln), 157.00 (425mln).
• AUDUSD: 0.6630 (617mln), 0.6635 (714mln).