Noreges Hints That It Could Begin Raising Interest Rates Earlier Than Previously Indicated – Action Forex

Credit: Original article can be found here


  • Continued optimism percolates in markets (Brexit, US stimulus, economic data) helping unwind safe haven flows
  • Plethora of rate decisions in session with no changes in policy (SNB, Norges, Indonesia, Philippines, Taiwan kept policy steady); Norway did tweak its rate path high
  • More rate decisions in the coming 24 hours (BOE, Czech Republic, Mexico, BOJ, Russia)


  • Japan govt said to revise FY20/21 GDP forecast (current year) from -4.5% to -5.0% and raised 2021 GDP growth forecast from 3.4% to 4.0%
  • Australia Nov Employment Change: +90.0K v +40.0Ke; Unemployment Rate: 6.8% v 7.0%e
  • New Zealand Q3 GDP Q/Q: 14.0% v 12.9%e; Y/Y: +0.4-1.8%e


  • Total global cases 74.2M (+1.0 d/d%); total deaths: 1.65M (+0.8% d/d);


  • PM Johnson ramped up pressure on EU by sending MPs home for Christmas before Brexit endgame talks’
  • UK govt spokesperson noted that govt expected Brexit talks to continue over the coming days; could recall Parliament next week to ratify a deal if there is one


  • FOMC left Target Range unchanged between 0.00-0.25
  • Fed Chair Powell – post rate decision prepared remarks stressed that monetary policy would continue to deliver powerful support to economy
  • Fed Projections revised its forecasts for GDP higher for both 2020 and 2021 while lowering their forecasts for the unemployment rate over the same period
  • Sen Maj Leader McConnell sated that both sides were still talking and believed that an agreement on COVID relief would happen



  • Indices [Stoxx600 +0.28% at 397.20, FTSE -0.07% at 6,566.24, DAX +0.68% at 13,658.55, CAC-40 +0.19% at 5,558.07, IBEX-35 -0.24% at 8,120.00, FTSE MIB +0.24% at 22,038.50, SMI +0.57% at 10,516.67, S&P 500 Futures +0.52%]
  • Market Focal Points/Key Themes: European indices open higher across the board but moderated gains as the session wore on; leaders among better performing sectors include consumer discretionary and materials; telecom and financials sectors among underperformers; Talktalk to be acquired by Tosca; FDA advisory board to meet on approval of Moderna’s covid vaccine; focus on pletora of interest rate decisions during the session; earnings expected in the upcoming US session include Blackberry, General Mills and FedEx


  • Consumer discretionary: Watches of Switzerland [WOSG.UK] +3% (earnings), Safestyle UK [SFE.UK] +17% (trading update)
  • Technology: WPP [WPP.UK] +3% (acquisition; outlook), cyan [CYR.DE] -13% (earnings)
  • Telecom: TalkTalk [TLAK.UK] +3% (confirms to be acquired; CFO steps down)


  • Swiss National Bank (SNB) Policy Statement reiterated language on FX that the CHF currency remained highly valued and was willing to intervene more strongly in the FX market
  • SNB President Jordan stated that inflation outlook was subject to high uncertainty and the economic momentum likely to be weak in both Q4 and Q1. Expansionary monetary policy countered upward pressure on CHF currency (Franc). Long-terms inflationary expectations anchored around 1.0%. Reiterated view that US Treasury Semi-Annual Report on FX would NOT impact its policy; in constructive talks with US
  • SNB member Maechler stated that SNB interventions needed to stop economic harm. CHF currency would have appreciated significantly more in 2020 without SNB intervention and would have placed an additional burden on our economy
  • Norway Central Bank (Norges) Policy Statement reiterated stance that policy rate would most likely remain at current level for some time to come
  • Norway Central Bank (Norges) Gov Olsen stated that did not see Deposit Rate being cut further and saw the probability of a rate hike in Q1 2022
  • UK Official Gove stated that would recall Parliament if Brexit deal was reached during holidays. Believe that Parliament could pass legislation before Dec 31st
  • German Agriculture Minister Kloeckner stated that found a solution for fishing quota issue on Brexit; North Sea fishing will be reevaluated in Jan 2021
  • Indonesia Central Bank (BI) Policy Statement noted that its policy was in-line with inflation and IDR currency (Rupiah) stability and supported the domestic economy. To strengthen monetary operations to be more accommdative and push for lower banking sector lending rates
  • Indonesia Central Bank (BI) Gov Warjiyopre-rate decision press conference noted that the domestic recovery was continuing and would accelerate in 2021. Vaccination and health protocol were key to recovery. Reiterated stance that IDR currency (rupiah) appreciation was -in-line with fundamentals and would strengthen FX stabilization measures. Inflation remained low on weak demand . To continue accommodative macroprudential policy to address demand-side issues on lending
  • Philippines Central Bank Policy Statement noted that it accommodative monetary policy stance with fiscal initiatives should quicken the economic recovery. Prepared to deploy full arsenal of instruments if necessary. Inflation environment remained benign with future path remaining firmly within the target range. Inflationary expectations remained broadly consistent with target
  • Taiwan Central Bank (CDC) Policy Statement noted that its decision to keep policy steady was unanimous and would continue its accommodative policy stance. Expected mild growth in Q4; sees exports continuing to growth in 2021 . Saw 2021 inflation outlook as mild and would continue monitoring housing market developments
  • China Foreign Ministry spokesperson Wang Wenbin reiterated stance that US and China should cooperate and not confront each other
  • Iran President Rouhani stated that he expected the US to return to its commitments and lift sanctions
  • Saudi Oil Min Abdulaziz stated that OPEC+ was capable of maintaining its unity

Currencies/Fixed Income

  • USD continued to be on soft footing as continued optimism percolated in markets (Brexit, US stimulus, economic data) thus helping unwind safe haven flows. Greenback also facing headwinds after Fed stated that its bond purchases would continue “until substantial further progress had been made” toward broader employment and inflation goals.
  • GBP/USD approaching the pivotal 1.36 level as optimism continued that a post-Brexit trade deal would be reached . House of Commons members would start their Christmas break Thursday evening but would be recalled if a trade deal was agreed. No surprises expected from BOE as Brexit talks are still continuing and sufficient to keep the MPC on hold at today’s meeting. Focus to be on any preperations if a no-deal outcome was the result.
  • USD/JPY tested 103.15 for a 5-week low
  • NOK currency firmer after Norges upward revision in its rate path. Move seen as signal that Norges would probably be able to start raising interest rates earlier than previously indicated

Economic Data

  • (NL) Netherlands Nov Unemployment Rate: 4.0% v 4.3% prior
  • (EU) EU27 Nov New Car Registrations: -12.0 v -7.8% prior
  • (CH) Swiss Nov Trade Balance (CHF): 4.5 v 3.9B prior; Real Exports M/M: +4.6 v -0.5% prior; Real Imports M/M: +4.8 v -3.1% prior; Watch Exports Y/Y: -3.2 v -7.0% prior
  • (ID) Indonesia Central Bank (BI) left the 7-Day Reverse Repo unchanged at 3.75% (as expected)
  • (FR) France Dec Business Confidence: 91 v 81e; Manufacturing Confidence: 93 v 93e; Production Outlook Indicator: -5 v -25e; Own-Company Production Outlook: +1 v -5e
  • (PH) Philippines Central Bank (BSP) left Overnight Borrowing Rate unchanged at 2.00%; Expected to leave Standing Overnight Deposit Facility Rate unchanged at 1.50%
  • (ES) Spain Q3 Labour Costs Y/Y: -1.1% v -8.3% prior
  • (AT) Austria Nov CPI M/M: 0.2% v 0.1% prior; Y/Y: 1.3% v 1.3% prior
  • (CH) Swiss National Bank (SNB) left both Sight Deposit Interest Rate and Key Policy Rate unchanged at -0.75% (as expected)
  • (SE) Sweden Nov Unemployment Rate: 7.7% v 8.4%e; Unemployment Rate (seasonally adj): 8.3% v 8.8%e; Trend Unemployment Rate: 8.6% v 8.7% prior
  • (HK) Hong Kong Nov Unemployment Rate: 6.3% v 6.5%e
  • (TW) Taiwan Central Bank (CBC) left Benchmark Interest Rate unchanged at 1.125% (as expected)
  • (NO) Norway Central Bank (Norges) left Deposit Rates unchanged at 0.00% (as expected); tweaked rate path higher
  • (PL) Poland Nov Employment M/M: 0.0% v -0.3%e; Y/Y: -1.2% v -1.5%e
  • (PL) Poland Nov Average Gross Wages M/M: 0.5% v 0.4%e; Y/Y: 4.9% v 4.6%e
  • (PL) Poland Dec Consumer Confidence: -24.9 v -26.0e
  • (EU) Euro Zone Nov Final CPI Y/Y: -0.3% v -0.3%e; CPI Core Y/Y: 0.2% v 0.2%e
  • (BE) Belgium Dec Consumer Confidence Index: -8 v -15 prior
  • (GR) Greece Q3 Unemployment Rate: 16.2% v 16.7% prior

Fixed income Issuance

Looking Ahead

  • 05:30 (HU) Hungary Debt Agency (AKK) to sell bonds
  • 05:50 (HU) Hungary Central Bank One-Week Deposit Rate Tender
  • 06:00 (BR) Brazil Dec IGP-M Inflation (2nd Preview): 1.5%e v 3.1% prior
  • 06:00 (BR) Brazil Central Bank Quarterly Inflation Report (QIR)
  • 06:00 (RO) Romania to sell RON700M in 3.7% 2024 Bonds
  • 07:00 (UK) Bank of England Bank (BOE) Interest Rate Decision: Expected to leave Interest Rate unchanged at 0.10%; Expected to maintain Asset Purchase Target (APT) at £875B
  • 08:00 (RU) Russia Gold and Forex Reserve w/e Dec 11th: No est v $587.7B prior
  • 08:00 (UK) Daily Baltic Dry Bulk Index
  • 08:30 (US) Nov Housing Starts: 1.535Me v 1.530M prior; Building Permits: 1.560Me v 1.544M prior (revised from 1.545M)
  • 08:30 (US) Dec Philadelphia Fed Business Outlook: 20.0e v 26.3 prior
  • 08:30 (US) Initial Jobless Claims: 815Ke v 853K prior; Continuing Claims: 5.70Me v 5.757M prior
  • 08:30 (US) Weekly USDA Net Export Sales
  • 08:30 (CA) Canada Nov Teranet Housing Price Index (HPI) M/M: No est v 1.3% prior; Y/Y: No est v 8.1% prior; Housing Price Index: No est v 246.09 prior
  • 08:30 (CA) Canada ADP Payroll: No est v -79.5K prior
  • 08:30 (CZ) Czech Central Bank (CNB) Interest Rate Decision: Expected to leave 2-Week Repurchase Rate unchanged at 0.25%
  • 10:00 (MX) Mexico Central Bank Economist Survey
  • 10:30 (US) Weekly EIA Natural Gas Inventories
  • 11:30 (US) Treasury to sell 4-week and 8-week bills
  • 12:00 (CA) Canada to sell C$3.0B in 2% 2051 Bonds
  • 14:00 (MX) Mexico Central Bank (Banxico) Interest Rate Decision: Expected to leave Overnight Rate unchanged at 4.25%
  • 14:00 (AR) Argentina Q3 Unemployment Rate: No est v 13.1% prior
  • (AR) Argentina Dec Consumer Confidence Index: No est v 40.9 prior
  • 16:00 (NZ) New Zealand Dec Consumer Confidence Index: No est v 106.9 prior
  • 16:45 (NZ) New Zealand Nov Trade Balance (NZD): +0.3Be v -0.5B prior; Exports: 5.2Be v 4.8B prior; Imp[orts: 5.0Be v 5.3B prior
  • 18:30 (JP) Japan Nov National CPI Y/Y: -0.8%e v -0.4% prior; CPI Ex-fresh food (Core) Y/Y: -0.9%e v -0.7% prior; CPI Ex-fresh food/energy (Core-Core) Y/Y: -0.3%e v -0.2% prior
  • 19:00 (NZ) New Zealand Dec Final Business Confidence: No est v -6.9 prelim; Activity Outlook: No est v 9.1 prelim
  • 19:01 (UK) Dec GfK Consumer Confidence: -31e v -33 prior
  • (JP) Bank of Japan (BOJ) Interest Rate and Policy Decision: Expected to leave Interest Rate on Excess Reserves (IOER) unchanged at -0.10% and maintain 10-year JGB Yield Target at 0.00%
  • 21:35 (CN) China to sell CNY36B in 50-year Upsized Bonds
  • 22:00 (TH) Thailand Central Bank to sell 2023 Bonds
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