NOK, AUD, KRW Outlook: RBC Capital Markets

Qutoes from RBC Capital Markets

• NOK:
  
  CPI inflation is expected to rebound in February. The Norges Bank rate decision on 19 March is seen as a close call and an unexpectedly soft report today would fuel the dovish camp. 
  
  
• AUD: 
  
  The NAB Business Survey's confidence index fell 2pts to flat while the conditions index was steady at 2. 
  
  The fall in confidence is a particularly disappointing result given the rate cut at the start of the month and the continued decline in the AUD. The components underlying the conditions index were all broadly unchanged.
  
  
• KRW: 
  
  BoK to cut rates by 25bps to 1.75%, potentially as early as this week (only 2 of 17 polled on Bloomberg expect a rate cut this week, with consensus expecting rates on hold at 2%).
  
  CPI inflation continues to surprise to the downside of consensus and the BoK's target range, and BoK is under increasing pressure to cut rates. Finance Minister Choi was quoted as saying, "We are deeply worried that the economy is slipping into deflation amid prolonged low consumer price rises."
  
  Consensus expects only 15bps of cuts this year, so if we are correct in our expectation of a BoK rate cut this week or in early Q2, KRW has scope to underperform. We have been long USD/KRW in our Portfolio Tracker since 1080.8 (26 January). We have a target of 1090 by end- 2015.