There are no scheduled events ahead in Sweden over the coming week. Hence, financial markets are expected to trail global markets with the FX market closely watching risk appetite after the US election given the SEKs sensitivity to global risk.
Last week we thoroughly digested the Riksbank's latest communications and feel obliged to make a slight addition to our view of continued expansionary monetary policy: namely a repo rate cut of 10bp (to -0.60%).
In Norway , the surprisingly low rate of inflation in September has seen off the worst of the uncertainty about consumer prices. The market now seems to agree with us that the krone's appreciation since the summer will gradually pull imported inflation - and hence overall core inflation - down. There will therefore be slightly less focus on the inflation numbers this time around. We expect a degree of stabilisation after the drop in September and forecast core inflation of 2.9% y/y in October.
More exciting for us will be the September figures for manufacturing production. The surprise fall of 6.2% m/m in August was not predicted by any of the leading indicators, and we were tempted to write at least part of this off as noise. We predict a partial correction in October, with industrial production climbing 3.4% m/m, but on a very uncertain basis. If the figures disappoint once again, we could be looking at a double dip in Norwegian manufacturing activity.
In Denmark , the statistical office publishes consumer prices for October on Thursday. Inflation dropped back to zero again in September, but we forecast a rate of 0.2% m/m and 0.3% y/y in October.
To read the entire report Please click on the pdf File Below