Main developments since last report:
- The Greek people said NO in yesterdays referendum on austerity. The euro weakened as a response to the result, but has already recouped most of its losses. In general EURUSD has been surprisingly steady over the last week.
- Greek woes keep safe haven currencies like JPY and CHF in demand. SNB interventions pull in the other direction for the latter.
- Further Riksbanken stimulus has weakened the SEK
- NOK sentiment remains poor as key figures disappoint and the oil price drops.
Our view:
- The NOK sentiment is expected to remain muted going forward as uncertainty of final effects of the oil induced slowdown continues. The NOK is however currently undervalued, and we expect to see a reversal of the NOK risk premium as volatility normalises.
- We believe the dollar will remain attractive. Diverging monetary policy will support the USD, while the weak EMU recovery weighs on the EUR.
- We think the yen will remain weak as BoJ will have to continue its loose monetary policy as inflation fails to reach the 2%-target
- Greek debt negotiations
- Fed minutes on Wednesday. Market will be looking for clues as to when Fed will start hiking rates. The same will be the case when Fed chair, Janet Yellen, speaks on Friday
- BoE MPC meeting (Thursday)
- Norwegian inflation data (Friday). Core inflation is expected to hold steady at 2.4% y/y
» Download Weekly Update - Foreign Exchange (pdf)