ECB’s Cipollone Backs Digital Euro as Europe Pushes for Payment System Independence 
Trump’s "Shock and Awe" Agenda: Executive Orders from Day One 
U.S. Treasury Yields Expected to Decline Amid Cooling Economic Pressures 
Fed Confirms Rate Meeting Schedule Despite Severe Winter Storm in Washington D.C. 
Bank of Japan Signals Cautious Path Toward Further Rate Hikes Amid Yen Weakness 
UBS Predicts Potential Fed Rate Cut Amid Strong US Economic Data 
China Extends Gold Buying Streak as Reserves Surge Despite Volatile Prices 
MAS Holds Monetary Policy Steady as Strong Growth Raises Inflation Risks 
Gold Prices Fall Amid Rate Jitters; Copper Steady as China Stimulus Eyed 
RBA Expected to Raise Interest Rates by 25 Basis Points in February, ANZ Forecast Says 
European Stocks Rally on Chinese Growth and Mining Merger Speculation 
UBS Projects Mixed Market Outlook for 2025 Amid Trump Policy Uncertainty 
BOJ Rate Decision in Focus as Yen Weakness and Inflation Shape Market Outlook 
Norwegian krona bulls have received a fillip over the past two weeks from a hawkish re-assessment of the central bank’s rate track and a sharp rally in oil prices. The Norges Bank signaled at its March meeting that policy rates would rise earlier than 1Q’19 as had been previously assumed (refer 1st chart), which in our economist’s view is consistent with a first hike in September.
The central bank has revised up its policy rate profile by 15bp and 6bp for the end of 2019 and 2020, even though it has taken down its CPI forecast by 0.16%pts and 0.33%pts for those horizons, indicating a real policy rate that is effectively 31bp and 48 bp higher for the end 2019 and 2020, respectively. This puts the Norges Bank in sharp contrast with most other G10 central banks that have adopted a more dovish tone.
In addition, Brent also rallied $5/bbl this week in part on supportive inventory data and partly on geopolitical concerns relating to US' commitment to the Iran nuclear deal. Please be noted that odds of production curbs continuing beyond June have increased with OPEC considering a technical change of using 7-yr average inventory levels instead of the current 5-yr to benchmark progress on supply re-balancing, which would result in current stocks looking appreciably above target and in need of further reduction.
We took part profit on our long NOKSEK position in cash after last week’s Norges Bank fueled rally, but remain in short EURNOK cash and a NOKSEK vs EURSEK option switch to milk the residual cheapness in the cross that screens a couple of points cheap relative to contemporaneous interest rate and energy price drivers even after this year’s run-up (refer 2nd chart). Courtesy: JPM
FxWirePro launches Absolute Return Managed Program. For more details, visit:
