The dollar was mixed against its G10 counterparts during the European morning with investors remaining cautious as the partial US government shutdown entered its tenth day. The Norwegian Krone was the main loser after inflation rose less than expected for September, reducing the likelihood of a rate hike and driving the USD/NOK to territory not seen for more than a month. Not far behind, the Swedish krone also suffered after industrial production for August registered a surprising fall (-2.3% mom vs +0.4% est.). Swedish CPI growth accelerated on a mom basis but was below expectations, and on a yoy basis was unchanged from the previous month.
The GBP/USD managed to recover slightly and to stabilize above 1.5900 during the European morning, ahead of today’s BoE monetary policy decision for October. We expect no change at the meeting, indeed we expect very little in the way of a statement. The result is not likely to have much impact on the currency as was the case last month when the MPC issued only a brief “no change” statement.
Later in the day, US weekly jobless claims are coming out. The market expects little change from last week. We expect the report to have less impact than usual as the Fed is probably more concerned with the government budget than with the employment picture. We have also two important speeches: ECB President Draghi and BoJ Governor Kuroda speak in New York.
The NOK/SEK has been moving in an upward sloping channel for three days. During the European morning it was quite volatile, breaking sharply to the upside and then sharply to the downside, before settling it back into its path. Currently the rate is testing the support line of the channel, which coincides with the 50-hour moving average. The 50-hour moving average has been supporting the action pretty well recently, although on the other hand, both the MACD and RSI show that there is not much strength behind the movment, since negative divergence is identified between the oscillators and the price action. Thus, I would not be surprised if a downward violation of the channel occurs, confirming the decelerating momentum. If such a break happens, I would expect the price to challenge the support level of 1.0736 (S1).
Support: 1.0736 (S1), 1.0690 (S2), 1.0663 (S3)
Resistance: 1.0799 (R1), 1.0844 (R2), 1.0878 (R3)
NOK/SEK Hour Chart" title="NOK/SEK Hour Chart" width="1728" height="812" src="https://d1-invdn-com.akamaized.net/content/pic6f7f73601b4df7fd5d86636fed7a867d.png">
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