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Norwegian Inflation Readings Come in Softer; Should Weigh on NOK
Written by article default Monday, 11 October 2010 08:22
OVERVIEW – The broad based weakness in the US Dollar brought on by expectations for another round of monetary accommodation from the Fed, along with some stabilization in global equities prices, has helped to keep the regional currencies very well bid and tracking by yearly highs. However, we would suggest that the markets are highly overdone on a technical basis and the risks from here are for relative weakness in the nordics over the coming days. The latest inflation data out from Norway on Monday is certainly not NOK supportive with the results producing a much softer than expected print.Eur/SekAlthough the overriding trend is still intensely bearish, the market looks to have finally found some form of a base by 9.09 and appears to be in the process of carving out a major inverse head & shoulders bottom. From here, look for additional upside back towards a measured move objective by 9.50 over the coming days. Ultimately, only back below 9.13 would delay and give reason for concern.
Eur/Nok Overall price action remains quite choppy with the market most recently stalling out ahead of the multi-day range lows by 7.80 and bouncing back to the range highs. From here, look for additional upside towards 8.20 over the coming sessions from where selling rallies is the favored strategy as the market adheres to the well defined range.
Usd/SekDaily studies are in the process of turning up from oversold, and the market could be looking to establish a material base by 6.60. Look for a daily close back above 6.73 to confirm bullish reversal prospects and open an acceleration back above 7.00 over the coming sessions. Inability to clear 6.73 will keep the pressure firmly on the downside for fresh yearly lows.
Usd/Nok Although the overriding trend has been bearish, the market remains very well supported on a medium-term basis by 5.80 and we could now be seeing the formation of yet another base by the mentioned psychological barrier. Daily studies are in the process of turning up, and the risks from here are for some additional gains back above 6.00 over the coming sessions. Look for a push above 5.86 to confirm and accelerate.
Gbp/NokThe market is content on some choppy consolidation for now and a break back above 9.40 or below 9.13 will be required to establish a clearer directional bias. Until then the best place to be is on the sidelines.
NOK/YEN DAILY
Nok/YEN Remains confined to a multi-day range broadly defined between 13.25 and 14.50. The market has most recently stalled out by the range highs, and as such, the preferred strategy is to look to sell in favor of a continuation of the prevailing range trade. Ultimately, a close back above 14.50 would be required to negate.
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