Scandi Daily 11.13

OVERVIEW – We had mentioned in Thursday’s commentary that there was a risk for a pullback in the regional currencies in light of the early warning signs of a shift in broader global macro sentiment as reflected through global equities and overinflated gold prices. Indeed, the markets did manage to intensify their reduction in risk appetite throughout the day, which in turn acted as a strain on both the NOK and SEK. On Friday, though it is still early in the day, there has been a reversal of fortunes for the regionals with both currencies outperforming across the board. It is no surprise to see the Australian Dollar and Norwegian Krone in the top slots on Friday, with any push back into risk likely to favor the two economies that have already reversed their respective monetary easing cycles. However, at this point, today’s rebound in currencies against the USD is merely classed as corrective and we project that the currency selling and reduction in risk appetite will once again emerge into the latter half of Friday’s session. Technical studies confirm our bias with all of the nordic crosses showing the Scandis in the process of carving out some significant tops against the major currencies. Gold has put in a very strong bearish outside day on the daily chart off of its record highs, and this should act as a catalyst for some material setbacks in the commodity which should weigh on oil, thereby also weighing on the highly correlated krone. US equities have also put in a bearish reversal day on Thursday, which should ultimately weight on the risk correlated krona.

Eur/Sek pullbacks should be well propped ahead of 10.15 with the market in the process of carving a meaningful base on the daily chart. Look for Thursday’s bullish close to now open the next push back towards the recent range highs by 10.53. A break above will confirm constructive outlook and accelerate.  Initial resistance at 10.27.

Eur/Nok despite the latest setbacks, we still view he overall price action as constructive since the market broke back above 8.41 in mid-October. Look for the price to be well supported ahead of 8.35 which now offers itself as previous resistance turned support, in favor of a bullish resumption back above key short-term resistance at 8.56 over the coming days. Wednesday’s bullish outside day reaffirms.

Usd/Sek our view is still constructive at current levels despite the latest setbacks and favors USD appreciation over the coming weeks.  We contend the market is attempting to carve out a major base rather than in the process of some bearish consolidation. The recent break back above 7.10 confirms bias and exposes 7.40-50 further up. Any setbacks are expected to be well supported ahead of 6.75, while back above 7.20 accelerates.  Initial resistance by 6.85 has now been cleared and this should get things going in our favor.