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Crude Oil Prices, NOK, SEK Brace for Data Cascade, OPEC Outlook

Crude Oil Prices, NOK, SEK Brace for Data Cascade, OPEC Outlook

2019-11-04 03:00:00
Dimitri Zabelin, Junior Currency Analyst
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Swedish Krona, Norwegian Krone Crude Oil Prices – TALKING POINTS

  • Crude oil prices, NOK, SEK brace for heavy data docket
  • OPEC World Oil Outlook will be critical for NOK, Brent
  • Riksbank minutes, housing data may send gloomy message

Learn how to use political risk analysis in your trading strategy!

Crude oil prices, the Swedish Krona and the petroleum-linked Norwegian Krone will be in for another volatile week with the publication of more Q3 earnings reports and critical economic data. A crucial event to watch for will be OPEC’s updated world outlook – especially for the oil-linked NOK. Riksbank minutes may stir additional volatility in SEK in addition to Norges Bank Governor Øystein Olsen’s speech on Monday.

Swedish Krona, Norwegian Krone Volatility Among Highest of G10

Chart showing SEK and NOK Implied Volatilities

OPEC: World Oil Outlook

Crude oil prices may find themselves torn between the upside force of supply-disruption fears from escalating Iran tensions and the downward pressure of waning global demand. In Vienna, OPEC is expected to publish its World Oil Outlook where it will outline forecasts for future demand. A less-than optimistic view could rattle the energy market and send Brent lower and possible drag down oil-correlated assets like NOK.

See my weekly crude oil forecast here!

US Economic Data

Key economic data out of the largest economy in the world will be published this week which could stir market-wide volatility, particularly in assets that are closely tied to the business cycle (e.g. NOK, SEK, AUD). Some of the key statistics include ISM data, consumer sentiment (learn why that’s important here), and factory orders. Soft readings could push USD lower if it fuels easing expectations despite the recent FOMC outlook.

Eurozone Economic Outlook: Key Data, EU-US Auto Tariff Delayed

On Sunday, US Secretary of Commerce Wilbur Ross announced that an auto tariff on European cars may not be necessary. This is the first step in defusing cross-Atlantic tensions, though it remains to be seen whether it will preclude the EU from pursuing its WTO complaint against the US for the latter’s illegal subsidies to Boeing. An auto tariff against the EU would hurt the continent’s already-ailing growth prospects.

As the destination for over 70 percent of Sweden’s and Norway’s cross-border sales, changes in European demand have a tangible impact on the export-oriented Nordic economies and their respective currencies. Important data to watch for this week in Europe will be German factory orders, Eurozone services and manufacturing PMI.

If these indicators publish soft number, it may lead capital to flow out of the Swedish Krona and Norwegian Krone. A meeting between the region’s finance ministers and publication of the European Commission’s economic forecasts will also garner traders’ attention and could cause NOK and SEK to fall if the messages carry gloomy undertones.

Bank of England Rate Decision: Why Does That Matter for NOK, SEK?

While the Bank of England is expected to holding lending rates at their current level, the commentary from Governor Mark Carney may elicit volatility in GBP crosses. The ambiguity about the UK’s future has sapped business confidence and cooled the country’s inflationary prospects. Swedish policymakers have repeatedly cited Brexit-related volatility as a key source of uncertainty that has clouded the Riksbank’s economic outlook.

Riksbank Minutes, Economic Data to Watch

Sweden’s central bank will be releasing its meeting minutes after monetary authorities decided to hold the benchmark interest rate at -0.25 percent last month. Officials cited weaker inflation – though this was in line with forecasts – along with Brexit and US-China trade uncertainty as risks facing the Swedish economy. Officials announced that rates will likely stay at zero after an intended hike in December. Will it be derailed?

If the minutes cast a gloomy shadow over the Swedish Krona’s prospects, it could further strain its performance. Year-to-date, SEK has been the worst-performing G10 currency against USD with -7.30 percent total returns. A barge of industrial, PMI and housing data will also be published throughout the week. The latter may elicit more attention over time as officials worry that Sweden’s financial system may be at risk.

EUR/NOK Technical Analysis

After reaching new all-time highs, EUR/NOK retreated and may aim to test the July 2019 uptrend and a possible support layer at 10.0602. However, Traders may wait to place trades until a clear directional preference is made apparent. A bounce back from the uptrend or the 10.0602 floor with confirmation may be what traders need in order to feel more at ease in adding to their long exposure. The next area to look out for may then be resistance at 10.2504.

EUR/NOK – Daily Chart

Chart showing EUR/NOK

EUR/NOK chart created using TradingView

USD/SEK Technical Analysis

USD/SEK’s decline amid a broad-based selloff in the US Dollar could see the pair test a support range between 9.4996-9.5323. Traders may wait to go short until the pair clear this area with follow-through before proceeding into zone 2 where USD/SEK may aim to test the 9.3719-9.3936 support range. Conversely, if the pair bounce back after testing support in Zone 1, traders may pile into long positions with an eye at the 9.6878-9.7228 resistance range.

USD/SEK – Daily Chart

Chart showing USD/SEK

USD/SEK chart created using TradingView

NORDIC FX TRADING RESOURCES

--- Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com

To contact Dimitri, use the comments section below or @ZabelinDimitrion Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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