Danske Research Team
Danske Bank A/S
Market movers ahead
- In last week’s Weekly Focus, we wrote that rate cuts are back on the agenda. Now it is the Riksbank’s time to ease, as we expect a repo rate cut by at least 10bp to -0.45% or more.
- It is the first time we will hear from Fed chair Janet Yellen since the initial Fed lift-off in December. We intend to listen carefully to any comments on what to expect from the Fed this year.
- China is due to release FX reserves figures on Sunday and we look for another decline of more than USD100bn, reflecting substantial intervention. Pressure on the CNY picked up significantly in January.
- Inflation figures for January are due in Denmark and Norway. We estimate CPI inflation was 0.7% y/y in Denmark and CPI-ATE inflation was 3.2% y/y in Norway.
- This week has seen further decline inflation expectations and interest rates.
- Concerns about the US economy prompted a sharp fall in the US dollar.
- The fall in inflation expectations raises questions about the central bank’s ability to fulfil its inflation mandate, especially with the policy vacuum until March.
- Yellen’s testimony on Wednesday will be crucial in providing guidance to the market.
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