FxWirePro: Spotlight on Scandis FX markets and options trades perspectives

In terms of the NOK, the negative impact of risk-off and lower oil prices completely countered the positive impact of the relative rates’ move following yesterday’s inflation surprise, see core inflation chart on Twitter, 10 December. This price action actually highlights the key question for Thursday’s Norges Bank meeting: how will Olsen and co weigh strong domestics against weaker externals? Specifically, we expect NB to lower the rate path but 

a) primarily for 2020 and 2021 and 

b) the new rate path should still confirm a March hike and almost two hikes for 2019 in total. If this proves right it should be modestly positive for the NOK upon announcement (even in this year-end environment) and confirm the strategic attractiveness of the NOK from a 2019 perspective. 

We still recommend gradually building up NOK exposure in December and find options a suitable tool. Since the beginning of last week, we been short EURNOK via 3M seagull and long the NOKSEK spot outright. 

EURDKK continued to trade around the 7.4640 level yesterday.

Historically, around 17% of the days EURDKK has fixed above 7.4630, Danmarks National bank (DN) has bought DKK in FX intervention. 

Hence, we could be nearing the end of twenty months of intervention drought. That said, we stick to our view that the current DKK weakness will not trigger an independent Danish rate hike. Courtesy: Danske bank

Currency Strength Index: FxWirePro's hourly EUR spot index is inching towards 113 levels (which is bullish), while hourly USD spot index was at 40 (bullish) while articulating (at 11:20 GMT).

For more details on the index, please refer below weblink: http://www.fxwirepro.com/currencyindex