BRENT TECHS: (Z5) Bear Threat Remains Present

Contained reaction in NOKSEK following this morning’s Scandi data. The cross hovers close to the 50-day EMA, currently at 0.9409 (+0.1% today).

• Norwegian August CPI-ATE was 3.1% Y/Y (vs 2.9% cons, 3.1% prior). Although Norges Bank projected 3.1% Y/Y in the June MPR, this August reading should be considered a little stronger-than-expected. That’s because the reduction to Child daycare prices (presented in the Revised National Budget) was not accounted for in the June MPR projections.
• Some analysts had thought this reduction in daycare prices would shave 0.2-0.3pp off annual CPI-ATE inflation. So a 2.8-2.9% Y/Y reading would have actually been “in line” with Norges Bank forecasts after accounting for this policy.
• At first glance, the inflation data alone shouldn’t be enough to derail a September rate cut. However, a hawkish set of readings in tomorrow’s Q3 Regional Network Survey could make the decision a closer call than currently implied in market pricing.
• Meanwhile, Swedish July GDP was estimated at -0.2% M/M. Note that the upward revision to June (1.4% M/M vs 0.5% initial) was already known information since the Q2 GDP print was revised to 0.5% Q/Q (vs 0.1% flash). Household consumption rose 0.2% M/M, while private sector production gave back some of June’s gains (-1.7% M/M vs an upwardly revised 2.7% prior). 

• RES 4: 121.00 Round number resistance
• RES 3: 120.74 High Aug 5 and the bull trigger
• RES 2: 120.61 High Aug 14 
• RES 1: 120.42 High Sep 5
• PRICE: 120.21 @ Close Sep 9
• SUP 1: 119.06/118.36 Low Sep 4 / 3         
• SUP 2: 118.00 Round number support
• SUP 3: 117.70 2.236 proj of the Aug 5 - 12 - 14 price swing  
• SUP 4: 117.36 2.500 proj of the Aug 5 - 12 - 14 price swing 

The primary trend condition in BTP futures is unchanged, it remains bullish.  The strong rally from last week’s low highlights a bullish development and signals the end of the recent corrective pullback between Aug 5 - Sep 3. Key resistance and the bull trigger is 120.74, the Aug 5 high. A break of this hurdle would confirm a resumption of the uptrend. Key support has been defined at 118.36, the Sep 3 low.

• RES 4: 92.30 High Aug 7
• RES 3: 92.06 High Aug 14      
• RES 2: 92.00 Round number resistance
• RES 1: 91.66 High Sep 9 
• PRICE: 91.36 @ Close Sep 9
• SUP 1: 90.65 Low Sep 2
• SUP 2: 90.31/89.36 Low Sep 4 / 3
• SUP 3: 89.22 1.618 proj of the Aug 21 - 27 - 28 price swing 
• SUP 4: 89.00 Round number support   

A rally in Gilt futures last week and bullish start to this week’s session, highlights a stronger corrective cycle. The move higher is allowing an oversold trend condition to unwind. The contract has breached initial firm resistance at 90.84, the Aug 28 and 29 high. A continuation higher would open 92.06, the Aug 14 high. On the downside, initial support lies at 90.65, the Sep 5 low.