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In focus today

In the US, January PPI data will be released this afternoon. The earlier CPI release landed slightly below expectations.

In the euro area, February's flash inflation data from France, Germany, and Spain will give important hints ahead of next week's euro area inflation release. We expect euro area HICP inflation to rise marginally from 1.69% y/y to 1.73% y/y, remaining at 1.7% y/y when rounded. Core inflation is expected to remain at 2.2% y/y. Energy inflation is expected to rise due to lagged effects of January's energy price and higher fuel prices in February, which is the main reason we expect a small rise in the headline at the second decimal. Monthly momentum in services inflation will be crucial, given its notable weakness in January.

In Norway, the last couple of months' NAV figures show that unemployment is falling again, which is a bit surprising given the moderate growth, the slowdown in employment growth, and the decline in vacancies. We expect that the unemployment rate (SA) will be unchanged at 2.1% in January. Finally, we suspect that the weak retail sales figures for December are partly due to problems with seasonal adjustment in connection with Black week. Hence, we expect retail sales to have increased by 0.7% m/m s.a. in January.

In Sweden, we will get the final GDP release for the fourth quarter. We expect GDP to grow by 0.4% q/q and 2.2% y/y. This is slightly stronger than the GDP indicator but is in line with production data, which showed positive signals. Monthly data for consumption indicates that the recovery is underway and has looked noticeably better since the second quarter of last year. We are also keeping an eye out for potential revisions to the third quarter. The most important factor for the Riksbank is domestic demand, particularly how consumption develops.

Economic and market news

What happened overnight

In Japan, Tokyo inflation (a good indicator of the country total) slowed in February, with CPI excl. fresh food at 1.8% y/y, down from 2.0% y/y in January. This marks the first time in 16 months that inflation has fallen below the Bank of Japan's 2% target. The decline was driven by the impact of fuel subsidies and the removal of gasoline tax surcharges, while the effects of recent food price hikes have largely subsided.

What happened yesterday

In US-Iran talks, 'significant progress' was reportedly made in Geneva on Tehran's nuclear programme, with technical negotiations set to resume on Monday in Vienna. According to the Wall Street Journal, the US has outlined key demands, including dismantling key nuclear sites, signing a permanent agreement, and transferring Iran's enriched uranium stockpile to the US. While the US has shown some openness to limited enrichment for medical purposes, this could still leave the door open for Iran to quite easily continue enrichment to weapons grade levels. With diplomacy still on the table, concrete results remain elusive, leaving crude markets in a wait-and-see mode and continuing to price in a significant risk of military escalation.

In Sweden, February's NIER Economic Tendency Survey showed weaker sentiment, with the Economic Tendency Indicator at 100.1 (prior: 102.8). Manufacturing confidence fell to 97.7 (prior: 103.4), while consumer confidence rose slightly to 96.3 (prior: 95.3). Sentiment now aligns with our GDP forecast, reducing the recent upside risks. For the Riksbank, the survey was relatively neutral. Price plans in the service sector remain elevated, but food price plans signal a decline, reflecting willingness to adjust prices ahead of April's VAT reduction.

In Denmark, PM Mette Frederiksen has announced parliamentary elections will be held on 24 March. Among other things, her party is running on introducing a new wealth tax to fund increasing spending on primary schools and a cut in property taxes on lowest valued homes. Denmark was set to hold elections in the autumn, but the government has the option of calling for earlier elections.

Equities: Global equities declined 0.3% yesterday. S&P500 declined 0.5%, while Nasdaq was down 1.2% and Russell2000 was up 0.5%. Stoxx600 was virtually unchanged. The slide was heavily concentrated in AI/tech exposed companies, with tech down 1.8%. In fact, it was only 30% of the S&P500 names that ended lower yesterday. Nvidia ended 5.5% lower, amid their report on Wednesday night showing strong sales, but AI implications investor concerns continue to linger, and when such a large company declines by more than 5%, it is hard for the rest of the market not to notice. Firms within the private equity/credit space suffered markedly following an Apollo private credit fund marked down its value of the assets and cut dividends, identifying the recent turmoil around private credit/equity names. Overnight, Asian stocks are generally positive with US futures in red.

FI and FX: Talks between Iran and the US have been described as constructive, although no concrete results have been announced. EUR/USD continues to trade near the 1.18 level, while EUR/SEK remains below 10.70. EUR/NOK has been range-bound between 11.20 and 11.35 over the past two weeks.

Rates have rallied in most markets in recent days. In the US, the 10y Treasury yield is trading at 4.0% this morning, while the 10y gilt yield has fallen to 4.27%, its lowest level since late 2024. EUR swap rates have also drifted lower, and today's preliminary inflation data from France, Spain and Germany could put additional downward pressure on yields if the figures surprise to the downside.

Daily Pivots: (S1) 1.1773; (P) 1.1801; (R1) 1.1828; More….

EUR/USD is still bounded in tight range above 1.1740 and intraday bias stays neutral. Near term risk will remain on the downside as long as 1.1928 resistance holds. Below 1.1740 temporary low will target 1.1576 support next. Firm break there should confirm rejection by 1.2 key psychological level and turn near term outlook bearish. However, break of 1.1928 argue that fall from 1.2081 has completed as a correction, and revive near term bullishness. Retest of 1.2081 should then be seen next.

In the bigger picture, as long as 55 W EMA (now at 1.1494) holds, up trend from 0.9534 (2022 low) is still in favor to continue. Decisive break of 1.2 key psychological level will add to the case of long term bullish trend reversal. Next medium term target will be 138.2% projection of 0.9534 to 1.1274 from 1.0176 at 1.2581. However, sustained trading below 55 W EMA will argue that rise from 0.9534 has completed as a three wave corrective bounce, and keep long term outlook bearish.

Daily Pivots: (S1) 155.71; (P) 156.13; (R1) 156.55; More...

USD/JPY is staying in consolidations below 156.81 temporary top and intraday bias remains neutral. On the upside, above 156.81 will resume the rally from 152.25 to 157.65 resistance first. Firm break there will target a retest on 159.44. high. On the downside, however, break of 153.90 will bring deeper fall to 152.25 support. Overall, with 38.2% retracement of 139.87 to 159.44 at 151.96 intact, price actions from 159.44 are seen as a corrective pattern. Also, rise from 139.87 is expected to resume through 159.44 at a later stage.

In the bigger picture, outlook is unchanged that corrective pattern from 161.94 (2024 high) should have completed with three waves at 139.87. Larger up trend from 102.58 (2021 low) could be ready to resume through 161.94. This will remain the favored case as long as 55 W EMA (now at 151.93) holds. However, sustained break of 55 W EMA will argue that the pattern from 161.94 is extending with another falling leg.

Daily Pivots: (S1) 1.3426; (P) 1.3501; (R1) 1.3556; More...

Despite the current steep decline, GBP/USD is still holding above 1.3432 and intraday bias remains neutral. On the downside, below 1.3432 will resume the fall from 1.3867 to 1.3342 support. Firm break there should confirm that it's already correcting the whole rise from 1.2099. However, break of 1.3574 resistance will argue that the decline has completed as a near term correction, and turn bias back to the upside for retesting 1.3867.

In the bigger picture, as long as 1.3008 support holds, rise from 1.3051 (2022 low) should still be in progress for 1.4284 key resistance (2021 high). Decisive break there will add to the case of long term bullish trend reversal. However, firm break of 1.3008 will raise the chance of medium term bearish reversal and target 1.2099 support next.

Daily Pivots: (S1) 0.7716; (P) 0.7735; (R1) 0.7759; More….

No change in USD/CHF's outlook as consolidations continue above 0.7603. Intraday bias remains neutral for now. In case of stronger rise, upside should be limited by 55 D EMA (now at 0.7824) to complete the pattern. On the downside, below 0.7627 will bring retest of 0.7603. Firm break there will resume larger down trend, and target 0.7382 projection level next. However, sustained break of 55 D EMA will indicate that a larger scale corrective bounce in underway and target 0.8039 resistance next.

In the bigger picture, down trend from 1.0342 (2017 high) is still in progress. Next target is 100% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.7382. In any case, outlook will stay bearish as long as 0.8123 resistance holds.

Daily Pivots: (S1) 0.7070; (P) 0.7103; (R1) 0.7140; More...

Intraday bias in AUD/USD remains neutral as it's still bounded in range below 0.7146. Consolidations could continue and deeper retreat cannot be ruled out. But downside should be contained above 0.6896 support. On the upside, above 0.7146 will resume larger up trend to 100% projection of 0.5913 to 0.6706 from 0.6420 at 0.7213.

In the bigger picture, current development argues that rise from 0.5913 (2024 low) is reversing whole down trend from 0.8006 (2021 high). Further rally should be seen to 61.8% retracement of 0.8006 to 0.5913 at 0.7206. This will remain the favored case as long as 0.6706 resistance turned support holds, even in case of deep pullback.

Daily Pivots: (S1) 1.3656; (P) 1.3685; (R1) 1.3710; More...

Outlook in USD/CAD is unchanged and intraday bias stays neutral. Consolidations from 1.3480 is in progress and stronger rebound might be seen. But upside should be limited by 55 D EMA (now at 1.3728) to complete the pattern. On the downside, below 1.3630 minor support will bring retest of 1.3480 low. Firm break there will resume larger down trend from 1.4791 to 61.8% projection of 1.4791 to 1.3538 from 1.4139 at 1.3365. However, sustained break of 55 D EMA will bring further rise to 1.3927 resistance and above.

In the bigger picture, price actions from 1.4791 are seen as a corrective pattern to the whole up trend from 1.2005 (2021 low). Deeper fall could be seen as the pattern extends, to 61.8% retracement of 1.2005 to 1.4791 at 1.3069. For now, medium term outlook will be neutral at best, until there are signs that the correction has completed, or that a bearish trend reversal is confirmed.

Daily Pivots: (S1) 0.9114; (P) 0.9132; (R1) 0.9151; More....

EUR/CHF is still bounded in consolidations pattern from 0.9092 and intraday bias stays neutral. Stronger rebound might be seen but upside should be limited by 38.2% retracement of 0.9394 to 0.9092 at 0.9207. On the downside, firm break of 0.9092 will resume larger down trend.

In the bigger picture, down trend from 0.9928 (2024 high) is still in progress with falling 55 W EMA (now at 0.9326) intact. Next target is 61.8% projection of 1.1149 to 0.9407 from 0.9928 at 0.8851. Outlook will stay bearish as long as 0.9394 resistance holds, in case of rebound.

Daily Pivots: (S1) 209.81; (P) 210.99; (R1) 211.72; More...

Intraday bias in GBP/JPY is turned neutral again with current retreat. Pull back from 214.98 could have completed as a near term correction at 207.20. Above 212.10 will bring retest of 214.98 first. Firm break there will resume larger up trend. For now, risk will stay on the upside as long as 207.20 holds.

In the bigger picture, current development argues that price actions from 214.98 might be a near term consolidation pattern only. That is, larger up trend from 123.94 (2020 low) is still in progress. Firm break of 214.98 will target 61.8% projection of 148.93 (2022 low) to 208.09 (2024 high) from 184.35 at 220.90. On the downside, though, break of 207.20 will revive that case that it's already in a larger scale correction.

Daily Pivots: (S1) 183.75; (P) 184.29; (R1) 184.76; More...

Intraday in EUR/JPY is turned neutral first with current retreat. Outlook is unchanged that correction from 186.86 should have completed with three waves down to 180.78. Above 184.75 will bring retest of 186.22/86 resistance zone. Decisive break there will confirm larger up trend resumption. Next target is 61.8% projection of 172.24 to 186.86 from 180.78 at 189.81. Overall, outlook will remain bullish as long as 38.2% retracement of 172.24 to 186.86 at 181.27, in case of deep retreat.

In the bigger picture, current development suggests that price actions from 186.86 are merely a near term corrective pattern. In other words, the long term up trend is still in progress. Firm break of 186.86 will pave the way to 78.6% projection of 124.37 (2022 low) to 175.41 (2025 high) from 154.77 at 194.88 next. This will now remain the favored case as long as 180.78 support holds.