NOK: USD/NOK Nears Key Resistance on Sliding Inflation Expectations
May-23 10:11
NOK remains the poorest performer in G10, with USD/NOK narrowing in on the Sept'22 high of 11.0111 - a break above which puts the pair at the best levels since the 2020 pandemic.
Moves follow the Q2 expectations this morning that showed a marked step-down in inflation expectations for this year (4% from 6%) and over the 2-3y horizon (4.3% from 5.4%) - the retrace of inflation expectations provides further evidence that price pressures among households may have peaked - representing the first step down in expectations since 2019.
Norges Bank's Q1 MPR continues to see inflation pulling lower in the coming months - meaning today's pullback in expectations may not be outside of policymaker forecast. Focus remains on the Jun 22 rate decision and fresh set of projections, at which the bank are seen upping their rate path for the coming few months.
Figure 1: Norges Bank Q1 MPR Inflation Expectations
USD: Further upside momentum for the Dollar
May-23 10:11
Another push higher for the Dollar keeps G10s under pressure.
The NOK is now down 0.89%, and the worst performer, but GBP, EUR, AUD, HKD, SGD, CNH, SEK are all testing their respective lows.
Next support in Cable is at 1.2353/45 Low Apr 17 / 10 and a key support.
Next support for the EUR will be at 1.0760 Low May 19.
GILTS: 10yr Yield eye the 4.15% level
May-23 10:07
UK 10yr Yield 4.15% is getting close, now would equate closer to 97.15.