Quotes from Commerzbank Corporates & Markets:
-SEK: The shock following Riksbank's rate meeting last week has already worn off a little. With a little distance a lot of market participants will probably see Riksbank's action with some detachment: a substantial step, and then time to digest it. Now we can concentrate on the economic data again. As we have stated repeatedly positive economic activity will inevitably lead to decent data publications.
-The PES unemployment rate for June provided a first positive surprise. June inflation data is due for publication today. Following a weak May (-0.2% yoy) we expect a countermove. In June the inflation rate should have reached at least 0%, possibly even a result slightly above that level.
-Immediately after Riksbank's rate cut CPI numbers have lost some of its relevance anyway - unless it surprises massively to the downside. The next important economic data is not due until late July (foreign trade, retail sales, sentiment indicators). Until then EUR-SEK is likely to be capped by the area around 9.31-9.32.
Quotes from Commerzbank Corporates & Markets:
-NZD: The Reserve Bank of New Zealand's rate hikes (RBNZ) - 25 bp each at every rate meeting since March 2014 from 2.50% to now 3.25% - have already left a mark on the PMI. The index eased from 58.3 points in March to 52.7 in May, but in June stabilised at 53.3 again. This development is not worrying as the RBNZ - with tighter monetary policy - is aiming to slow economic momentum and dampen inflationary risks.
-Instead the small fall of the PMI over the past months should be seen as a sign that an overheating can be avoided and that economic momentum is normalising. However, as we are so close to the historic highs of August 2011 in NZD-USD at 0.8843 NZD traders should be cautious with further NZD purchases as things are beginning to hot up in NZD-USD.
-The RBNZ had been considering interventions to counteract the strength of the kiwi weeks ago despite the fact that it is in the middle of a rate hike cycle. Moreover the RBNZ is likely to raise its key rate again the week after next, but is likely to announce a break after that. As a result NZD-USD should begin to run out of steam. At 0.90 at the latest RBNZ is likely to put the brakes on and intervene - verbally or even actively.
EUR/JPY - US NAME TRADE RECC TO SELL EUR/JPY TODAY - TARGET 133.00/STOP 140.00, CITES CONTINUED ECB AGGRESSIVE GUIDANCE, WHILE BOJ EASING LESS LIKELY NOW 07/07/2014 10:50:00
Quotes from RBC Capital Markets:
-NOK: Over the last month, EUR/NOK has been dragged up by sharp rises in EUR/SEK, though in reality, similarities between the cyclical positions of the two economies are limited and CPI releases this week will highlight this. Core CPI in Norway is close to target, on a rising trend and has surprised to the upside in four out of five months this year.
-The material risk of a rate cut this year that the Norwegian forward curve moved to discount after the last Norges Bank MPR looks vulnerable if inflation continues its recent trend higher, despite the aggressive easing by the Riksbank last week. We see recent NOK weakness, partly spillover from SEK, is an opportunity to express our core positive view.
Quotes from Commerzbank Corporates & Markets:
-CNY: At least the Chinese central bank cannot be accused of being overeager to comply. This week representatives of the US Treasury are travelling to China for talks, but the signals sent out by Beijing regarding a resumption of the CNY appreciation trend remain at best mixed.
-Of course the Chinese currency has appreciated again on the spot market since the extremes seen in April and May, but at the same time the median USD-CNY range was raised notably over the past few days. In the end both the spot and the median price are controlled by the Chinese regime.
Quotes from Commerzbank Corporates & Markets:
-CZK: The minutes of the last CNB meeting surprisingly created a little upside momentum in EUR-CZK at the end of last week. The wording was generally dovish. While the economy develops well as expected inflation has been disappointing since the beginning of the year. This is due to low inflation abroad, which is no doubt referring mainly to the euro zone, as well as lower than expected food price inflation.
-As a result the board members agreed that the exchange rate target in EUR-CZK would have to be maintained for longer than originally planned. What surprised the market was the statement that the CNB was unable to exclude raising the exchange rate target.
-So far only the ultra-doves had mentioned the possibility of such a step. In our view - and other comments in the minutes point in the same direction - the economic and inflation situation would have to deteriorate massively for such a step to become likely. Instead we expect the exchange rate target to be extended to Q2 2015.
Quotes from UniCredit Research:
-The unexpectedly strong rate cut by the Riksbank, which was probably about synchronization with the ECB, should weigh on the SEK for a while. Moreover, the Riksbank lowered its CPI projections for 2014 and 2015 dramatically and expects CPIF inflation to reach 2% only at the beginning of 2016, with the repo rate probably slowly beginning to rise at the end of 2015.
-We expect EUR-SEK to remain above 9.25 as next week's Swedish CPI data will unlikely contradict the Riksbank's inflation assessment. On the other hand we do not expect EUR-SEK to increase much above 9.30 in the short term, as the cross has already reached overbought territory.
Quotes from UniCredit Research:
-Despite our liking cable, we still keep our reservations against much higher levels in the very near future as, although the cross shows a remarkable upward momentum, it is also not too far from overbought levels, measured by the 22D Z-score. Exactly the opposite applies to EUR-GBP, with a strong downward momentum and close to oversold territory.
USD/SEK should see greater upside than EUR/SEK03/07/2014 10:15:00
Quotes from Societe Generale Cross Asset Research:
-Sweden's Riksbank took markets by surprise this morning by cutting the repo rate by a larger-than-forecast 50bp to 0.25%. The sharp 50bp cut is evidently taking a heavy toll on the SEK and obviously calls for an upward revision of the targets for SEK crosses.
-EUR/SEK is up 2.1% and a break of the 2011 high (9.3979) would open the door for a move over 9.50. USD/SEK pierced the 2013 high of 6.8654 (+2%), opening up a move up to 7.00.
-With the ECB still keeping the door open to further accommodation but the Fed winding down its policy stimulus, USD/SEK should see greater upside than EUR/SEK.
