UK CPI falls, Swedish CPI boosts the krona – BBH

FXStreet (Barcelona) - The BBH Team notes that two inflation reports dominate today's macro-economic developments, with UK CPI falling below consensus (0.7%) to 0.5%YoY, and Swedish CPI remaining firm at 0.2% MoM, boosting the Swedish krona.

Key Quotes

“The UK reported a 0.5% year-over-year increase in CPI. This was below the 0.7% consensus and is half the pace seen in November.”

“BOE Governor Carney has to write a letter to Chancellor of the Exchequer Osborne to explain the undershoot. Energy and food prices are the key drivers.”

“We note that the core rate actually ticked up from 1.2% to 1.3%. The December short-sterling futures firmed to test the contract high set last April at 99.32 (implied yield 68 bp) as the market all but gives up on the idea of a rate hike this year.”

“Sweden also reported December CPI figures. It was surprisingly firm at 0.2% on the month. The market had expected a 0.1% decline. The year-over-year rate did slip into more negative territory (-0.3% from -0.2%) but was not as low as had been feared/expected (-0.5%). The underlying rate did tick up to 0.2% from 0.0%, but caution is advised here. The underlying rate is calculating using a fixed mortgage interest rate rather than excluding food and energy.”

“The Swedish krona rallied on the news and is the strongest of the major currencies today, gaining 1% against the US dollar.”

“The Riksbank meets on February 12, and an adoption of aggressive action seems somewhat less likely now. It may still adjust its forward guidance, pushing out the timing of the first rate hike and perhaps lengthening some repo operations, but negative rates or bond purchases seems unlikely.”

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news

Latest Forex News

Latest Forex News

Editors’ Picks

EUR/USD on the way to 1.1280 key support

EUR/USD fails to cheer greenback weakness, stays depressed around 1.1310 during the initial Asian session on Friday. While portraying the sober mood of the major pair traders, the quote remains below 200-SMA for the first time in a fortnight.


GBP/USD holds above 1.3600 as dollar fails to capitalize on US data

GBP/USD tested 1.3600 earlier in the day but managed to stage a recovery in the early American session. The greenback is having a hard time gathering strength as investors assess the mixed macroeconomic data releases from the US.


Gold bulls looking for a re-test of November high at 1,877.15

Gold resumed its advance after a short-lived consolidative stage, reaching a fresh two-month high of $1,847.92 a troy ounce. The dollar came under renewed selling pressure after the US released mixed economic figures.

Gold News

Decentraland holds support but MANA may return to $2

Decentraland price action is, at present, very indecisive. However, while the overall outlook is bearish – especially within the Ichimoku Kinko Hyo system, there is evidence that a turnaround to the upside may be coming soon.

Read more

When real rates are negative for a sustained period, is it a sign of looming recession?

We agree that inflation should moderate this year due to the money side of things, but worry that monetary policy is powerless against most of the supply chain issues, commodity prices, greedy consumer goods companies, and that weird labor shortage.

Read more