In Sweden , we expect the Riksbank to prolong the current QE programme by six months (SEK30bn) and cut the repo rate by an additional 10bp to -0.60%. To give some additional flavour, we underline that the prolongation of the QE programme is relatively widely accepted among analysts and market participants, while the additional cut is considered more of a stretch. We have had our doubts too, as we believe this to be a rather ineffective measure. However, as the Riksbank indicated a repo rate cut is a strong possibility (6bp of what we believe are 10bp steps) and after the ECB breaking through the depo floor, we again feel more at ease with forecasting yet another cut.
In Norway , the coming week should give us a clearer idea of the labour market. The NAV and LFS unemployment measures (due Wednesday 21 December and Friday 23 December, respectively) have long painted very different pictures of jobless levels but have gradually begun to converge over the past couple of months. We expect the unemployment rate to rise to 2.9%, with a slight risk on the upside. We believe that the LFS jobless rate will be unchanged at 4.8% in October.
On Thursday 29 December, we get the November figures for retail sales. For now, we expect a slight recoil following the strong October figures and predict a fall of 0.5% m/m in November.
In Denmark , the statistical office is due to release employment figures for October on Wednesday.
The DKK has recently been supported by the political uncertainty in Europe and recently also Danish pension funds' large gains on US equities, which may have nourished the demand for the DKK. Consequently, the Danish central bank, Danmarks Nationalbank, may have had to buy EUR/DKK to keep the exchange rate stable.
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