Nordic & Swiss

Nordic & Swiss Economics Weekly

Nordic & Swiss Economics Weekly

Virus news testing the SNB; “Take 2” for Swedish PM

Market worries about the B.1.1.529 virus variant have exacerbated upward pressure on the safe-haven Swiss franc and will test the SNB’s tolerance of a stronger currency. In our view, the Bank seems to be focused on managing rather than preventing the appreciation against the euro and we suspect that it will eschew large-scale interventions unless the franc reaches the CHF 1.025 per euro mark. Next week, we expect Swedish national accounts data to show that GDP rose by 1.8% q/q in Q3, while Swiss inflation data are likely to show that the headline rate edged down to 1.1% in November.

26 November 2021

Nordic & Swiss Economics Weekly

SNB abandons its long-standing line of defence

We argued only last week that the SNB would be comfortable with letting the Swiss franc rise against the euro. As it happens, after the franc pushed through the long-defended CHF 1.05 per euro mark in trading this morning, we didn’t have to wait long to be vindicated. We think that large-scale interventions are unlikely unless the franc pushes towards CHF 1.025 per euro. Meanwhile, Swedish policymakers are all but certain to leave their policy settings on hold at the Riksbank’s scheduled announcement next Thursday, but we expect them to dial down the dovishness a bit.

19 November 2021

Nordic & Swiss Economics Weekly

Would the SNB be comfortable with franc/euro parity?

The persistent weakness of Swiss inflation, and the resulting trend appreciation in the nominal exchange rate, presents the SNB with a moving target when assessing when it will intervene during bouts of upward pressure on the franc. Having defended the CHF 1.05 per euro mark in earnest last year, we suspect that the SNB’s “line in the sand” may now be closer to CHF 1.025, and that it could live with the franc rising to parity with the euro over the coming years. Next week, we expect Swedish inflation data to show that the headline rate was unchanged at 2.8% in October. Meanwhile, the delayed release of GDP data from Norway (Friday) is likely to show that mainland output rose by about 2.5% q/q in Q3.

12 November 2021
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Nordic & Swiss Economics Weekly

Déjà vu at the SNB; labour shortages reach Greenland

The renewed rise in the Swiss franc has lifted it back to territory that will ring alarm bells at the SNB, and the usual release of sight deposit data on Monday morning will indicate whether the Bank has put its money where its mouth is by intervening to stem the appreciation. Elsewhere, we expect data from Norway to show that CPI-ATE inflation remained well below the Norges Bank’s target in October, and that mainland GDP rose by 2.5% q/q in Q3, which would have left it about 1.5% higher than its Q4 2019 level.

Nordic & Swiss Economics Weekly

Supply problems remain; Norges Bank to press on

Sweden’s Q3 GDP data, published this week, were not as strong as they first appeared, and we expect supply problems to continue to weigh on activity there. The latest data for Switzerland suggest that it is holding up better. Next week, we expect Swiss CPI data to show that inflation there remains well below that elsewhere in Europe. And while the Norges Bank will not spring any surprises at its meeting on Thursday, we think investors are underestimating the pace of rate hikes next year.

Nordic & Swiss Economics Weekly

Supply issues biting in Sweden; e-krona has a logo!

We assume that Swedish output recovered about two thirds of August’s precipitous plunge in September, and that preliminary Q3 GDP data due for release next week will show that the economy grew by 0.7% q/q in the quarter. But the risks lie to the downside. Meanwhile, following the weakness of the euro-zone PMIs in October and amid growing signs of supply shortages biting, the releases of the ETI from Sweden and the KOF from Switzerland are likely to show that manufacturing output weakened at the start of Q4.

Nordic & Swiss Economics Weekly

Few signs of inflation in Scandinavia

While global financial markets are obsessing over the possible rebirth of inflation, there are precious few signs that it is about to take off in Scandinavia. The increases in headline inflation for September in Norway and Sweden were due to higher energy inflation. This should drop sharply next year as the supply of renewable electricity rebounds. Meanwhile, the US Treasury is due to publish its latest report on “currency manipulators” in the coming week or so but Switzerland should again get a free pass.

Nordic & Swiss Economics Weekly

Sweden’s August shocker

The slump in Sweden’s GDP indicator for August brought its economy back below its pre-pandemic level, whereas Norway – which appears to be unencumbered by these headwinds – saw its economy continue its strong expansion. Next week, we expect to learn that Norwegian core inflation rose in September but remained below target, whereas Sweden’s core inflation rate looks set to hit a 13-year high.

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