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Scandi Daily 12.11
OVERVIEW – Price action in the regional currencies
over the past 24 hours has been far from impressive given the latest
inflation data and resurgence in risk appetite. Inflation data in both
Norway and Sweden came in slightly higher than expected on Thursday,
while broad based sentiment improved, helping to prop global equity and
commodity prices. However, the NOK has actually been underperforming on
Friday, while the SEK sits in the middle of the pack. Normally, a
firmer inflation print and healthy risk appetite would translate into
outperformance in these currencies and we are therefore somewhat
surprised with the relative weakness. It is worth noting however, that
despite the rebound in commodities, oil has been lagging, which could
explain the diminished demand for the correlated NOK. Nevertheless,
our technical studies have been warning of weakness in the Nordics over
the medium-term and we continue to see these currencies underperforming
over the coming weeks. A recent study that connects movement of hedge
fund money with carry performance and risk appetite does not bode well
for the Scandis, with the study now warning of a pullback in carry
currencies, commodities and global equities over the medium-term.
Eur/Sek
pullbacks should be well propped ahead of 10.15 with the market in the
process of carving a meaningful base on the daily chart. Latest price
action reaffirms outlook with the market finally taking out the
multi-day consolidation highs by 10.53 to now expose 10.60-70 further
up.
Eur/Nok price action confirming our constructive
outlook and we favor of a bullish resumption back above key short-term
resistance at 8.56 over the coming days. A closer look at the daily
chart reveals the potential formation of a major bottom. Ultimately,
only below 8.24 negates.
Usd/Sek our view is still constructive at
current levels despite the latest setbacks 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. The recent break back above 7.10 confirms bias and
exposes 7.40-50 further up. Any setbacks are expected to be well
supported ahead of 6.75, while back above 7.20 accelerates.
Usd/Nok even with the latest pullbacks, we still
retain a constructive outlook for the pair with the market looking to
carve out a major bottom on the daily chart. We do not anticipate a
retest of the recent 5.50 lows and instead favor a bounce at current
levels back towards neckline resistance at 5.85, a break of which will
trigger the double bottom formation.
Gbp/Nok recovery rally has pulled back since reaching
9.53 in the previous week, but our outlook remains constructive, and a
higher low is now sought out above 9.00, ideally by 9.23, ahead of the
next upside extension beyond 9.53.
Nok/Jpy has been well confined to a very choppy range
trade over the past several weeks, largely defined between 15.00 and
16.50. Pullbacks have once again been well supported in the 15.00 area
ahead of the latest bounce back into the range. From here, we recommend
continuing to play the range high-lows.
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
To contact the author of this report, e-mail jskruger@fxcm.com and you will be added to the "distribution" list.
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| Category: Scandi daily | Added by: forex-market (2009-12-11)
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