In Sweden, March retail will be released today and we expect sales to perform around the same moderate pace seen for the past several months. The most interesting data, however, is the consumer and business sentiment surveys by NIER and the PMI on Friday.
Riksbank minutes supported our call for a July rate cut and relative rates could still weigh on the SEK in the spring.
We expect Norwegian retail sales to climb 0.3% m/m in March, resulting in the strongest quarterly growth for a year. This would remove even more of the downside risk to the Norwegian economy, but as usual the timing of Easter makes the March and April data very uncertain.
Norway will on Tuesday hold an auction in the NGB May 2021 bond - the spread to Germany is still at a very high level and the absolute level is significant relative to EU peers. Hence, we expect to see decent demand at the auction as we saw at the recent 10Y auction.
Last week Danmarks Nationalbank surprised by increasing the rate on certificates of deposits by 15bp to 0.05%, thereby effectively ending the period of negative rates in Denmark, which has lasted since July 2012. On Friday, April's currency reserve figures are published and the interesting part will be how much intervention it took to trigger the rate hike.
The annualised 1M carry on a long the EUR/DKK position is still well above 30bp. Hence, if you believe that the negative DKK carry will weigh on DKK and that the Danish central bank will allow EUR/DKK to move back towards the 7.4660-level before intervening in the market again, it makes very good sense to be long EUR/DKK in the FX forward market.
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