FX reserves unlikely to show intervention in EUR/DKK

In focus today

Today is expected to be a quiet day in terms of tier 1 data.

In Denmark, Nationalbanken will publish its press release on October's FX reserve, revealing whether it intervened in the FX market last month. While EUR/DKK has reached its highest level in three years, it remains below the threshold that triggered intervention in 2020. Hence, we do not expect Nationalbanken intervened in October. Nevertheless, we will monitor the release today for confirmation.

Economic and market news

What happened overnight

In Australia, the Reserve Bank of Australia kept its policy rate unchanged at 3.60%. The decision was widely expected following higher-than-expected Q3 inflation figures on 29 October. Annual inflation growth rose back above the RBA's target range, prompting the central bank to emphasise the need for caution and a data-driven approach to its economic outlook.

What happened yesterday

In the US, the ISM Manufacturing Activity Index for October came in at 48.7, below the consensus of 49.6 (prior: 49.1). While the headline figure was weaker, the details were more positive. The new orders index recovered, while inventories declined, leading to the order-inventory balance turning increasingly positive. This tends to be a positive sign for production growth over coming months. At the same time, the prices index fell, suggesting tariff-driven inflation pressures remain subdued. Imports stayed low, continuing the trend from previous months.

Several Fed officials were on the wire on Monday, highlighting divisions ahead of December's meeting. Cook called the meeting 'live' but not a lock for a rate cut, Goolsbee flagged inflation concerns, Miran reiterated his view that policy remains too restrictive, and Daly expressed an open mind about a December rate cut. Markets currently price a 60% chance of a cut next month.

In the euro area, the final manufacturing PMI for October confirmed the flash release of 50.0, indicating the sector has exited contractionary territory. France was revised up to 48.8, while Germany's release confirmed the flash estimate of 49.6. Combined with services PMIs reaching a one-year high, the euro area saw a positive start to Q4. This supports our view that the ECB will not deliver more rate cuts this year or in 2026.

In Sweden, the October Manufacturing PMI decreased slightly to 55.1, largely driven by declines in employment, new orders and inventories, while production improved. This follows last month's strong reading of 55.6 and indicates continued growth in manufacturing activity, albeit at a slightly slower pace.

In the US-China tech landscape, President Trump announced that Nvidia's most advanced Blackwell AI chips will be exclusive to American companies, barring exports to China and others. Meanwhile, the Financial Times reported this morning that China has ramped up subsidies to reduce energy costs for major data centres by up to 50%, supporting domestic tech giants as they face higher electricity costs from the Nvidia chip ban.

Equities: Equity markets saw a rather uneventful session, with both Europe and the US ending little changed. Key macro data offered limited direction, leaving equities broadly flat. Instead, AI-related headlines dominated, with Amazon rising 4% after announcing a major partnership with OpenAI. This marks one of several recent deals OpenAI has struck to support its ambitious data centre capex plans. Another trend in equity markets has been a pick-up in M&A over the past months. Yesterday, it was Kimberly-Clark's turn to announce a sizable acquisition. Increased M&A activity should support our preference for small caps, as they are more likely to be the 'buying candidates'.

FI and FX: It was a relatively quiet day in the global markets on Monday. On the FX market Scandies and the USD saw marginal gains vis-à-vis the EUR and JPY. EUR/USD traded close to the 1.1500 mark yesterday, while EUR/SEK fell below 10.95 and EUR/NOK dropped close to 11.65 again. Bond yields rose 2-3bp across the curve both in Europe and the US.