OVERVIEW – While some setbacks in the regionals on
Friday could not be prevented, in light of the much stronger than
expected US employment data, both the NOK and SEK have been showing
better bid against many other major currencies on the back of some
sounder local economic data and optimistic comments on the outlook for
the nordic economies. Most recently, Norwegian manufacturing data has
come in better than expectation, while Swedish FinMin Borg has said
that the economy will probably grow faster in the next couple of years
than expected. Nevertheless, our technical outlook for the local
currencies is not as encouraging, as we continue to see the regionals
as overbought on a medium-term basis and due for some additional
weakness against both the USD and Euro over the coming weeks. Looking
ahead, all eyes will be on today’s Swedish budget balance and Norway’s
industrial production data.
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. The latest pullbacks have once again been well supported in the
15.00 area ahead of a bounce back into the mid-range. Look for the
market to find some resistance in the 16.00 area.
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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