G10 FX Week Ahead: Hard As Iron

Overall, however, we prefer EUR/CHF to trade back to 1.11 over coming weeks as confidence grows in the global recovery and EUR/USD stays supported. As a core view, we expect the Swiss National Bank to position itself substantially behind the ECB when it comes to policy normalisation – a key factor that should drive EUR/CHF higher multi-quarter.

NOK: Wider inflation pressure make NB more likely to act



Week ahead bias Range next week 1 month target



Mildly Bearish 9.9500 - 10.1570 9.9500

The negative impact of the strong US April CPI on NOK was temporary and EUR/NOK is now back close to the 10.00 level. With the upside risks to inflation reading being a global phenomenon, NOK should be one of the main beneficiaries as the Norges Bank is the G10 central bank that is likely to react first on the interest rate side. While the late 4Q21 hike is already well flagged by the NB, an earlier hike in September is also on cards. This is a clear supportive factor for NOK. Brent oil testing the US$70/bbl level is also helpful for the krone.

It is a fairly calm week on the Norwegian data front. We only have the April Trade balance (Tuesday) and this won’t affect NOK price action too much.

SEK: Hovering around the EUR/SEK 10.10 gravity line is the name of the game



Week ahead bias Range next week 1 month target



Neutral 10.0400 - 10.1930 10.1000

It continues to be the more of the same for SEK, with the EUR/SEK 10.10 gravity line being the level to which SEK continues to converge, irrespective of upside or downside surprises to global risk appetite or domestic data. This was the case in the past week and should be the case next week. While next week the EUR/SEK 10.10 level should be the target, we look for more krona gains as we get into the summer with SEK set to benefit from the more synchronized global recovery (as Europe in part catches up with the US).

There is not much to see on the domestic data front next week. 1Q industrial capacity (Friday) should have no impact on SEK. The bar is high for domestic data to impact SEK meaningfully given there is no spill over into the Riksbank reaction function as the central bank has been clear it will keep the key rate unchanged this year and next. Indeed, the rise in the April CPI above 2% this week had no impact on SEK as the central bank signalled it would look through it.


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Disclaimer: This publication has been prepared by the Economic and Financial Analysis Division of ING Bank N.V. (“ING”) solely for information purposes without regard to any ...

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