scandi daily

OVERVIEW – The economic calendar for the regional currencies is once again empty, with the markets continuing to trade off of the broader global macro risk sentiment. Yesterday’s late US equity sell-off  post the FOMC has not helped to generate any fresh bids in the Scandis, but the currencies were able to benefit somewhat on the back of some widespread currency buying. It is interesting to note the breakdown in the familiar correlation between US equities and the USD on Wednesday, with the stock market selling off despite some USD depreciation. The krone has been weighed down against the krona on Thursday, perhaps on the back of some arguably less hawkish comments from Norges Bank Deputy Governor Qvigstad. While conceding that it was most probable that the deposit rate will be at 1.75% by the end of March, he was also aware of the risk of shifting monetary policy too aggressively after saying that the bank should “pace rate increases in a manner to steer recovery in domestic demand without boosting the krone an hurting exporters.”  Looking ahead, price action should be heavily influenced by the stacked global calendar on Thursday, highlighted with the BOE and ECB rate decisions.

Eur/Sek is in the process of carving out a major base with the market most recently breaking back above the multi-day consolidation range highs by 10.40 which should now accelerate the recovery. Look for a push over the coming days back towards previous support now tuned resistance at 10.70. Setbacks should be well supported ahead of 10.30.

Eur/Nok market is finally now exhausted and on the verge of some major upside over the medium-term.  The latest break back above 8.40 confirms the shift in trend and sentiment and should accelerate gains towards previous range support now resistance in the 8.60 area over the coming days.  Only back below 8.40 would delay.

Usd/Sek traded down to a fresh yearly low by 6.75 ahead of the latest sharp reversal. Despite the underlying downtrend, our view is nevertheless constructive at current levels and favors USD appreciation over the coming weeks.  We contend the market is attempting to carve out a major base rather than in the process of some bearish consolidation. Monday’s break back above 7.10 confirms bias and exposes 7.30 further up. Any setbacks are expected to be well supported ahead of 6.95.

Usd/Nok has now officially carved out a meaningful low by 5.50 with the market racing higher to trigger a double bottom formation. The break back above the neckline at 5.66 now opens a fresh upside extension towards 6.00 over the coming sessions. Setbacks should now be well propped ahead of 5.60.

Gbp/Nok finally showing signs of recovery after recently basing out by 8.82. Daily studies show plenty of room for additional corrective upside, and we look for a push back towards 9.65 over the near-term. The break of a bullish ascending triangle above 9.45 strengthens outlook. Setbacks should now be well supported ahead of 9.25.

Nok/Jpy as had be warned, the market was well overextended above 16.50 and the price has since retreated back into the well defined range. Deeper setbacks are now seen towards 15.00 over the coming sessions.  Rallies are expected to be well capped above 16.00.
 

Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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