Norges Bank

Bloody Start To Friday The 13th For Global Markets

Global stocks have started Friday the 13th on the wrong foot, with not only Hong Kong GDP unexpectedly tumbling by 0.4%, the worst print in years while retail sales fell for a thirteenth straight month in March, the longest stretch since 1999 as the Chinese hard landing spreads to the wealthy enclave, but also following a predicted collapse in Chinese new loan creation, which will reverberate not only in China but around the globe in the coming weeks. The latest overnight drop in the Yuan hinted that should the recent USD strength continue, China will have no choice but to repeat its devaluation from last summer and winter. 

Futures Halt Selloff, Levitate Higher On Another USDJPY Spike; Oil Rises

If yesterday's selloff had a specific catalyst, namely some of the worst consumer retail earnings seen in years, it merely undid the Tuesday rally which levitated global risk with no fundamental driver, aside for a 200 pip spike in the USDJPY.  Some central bankers may even say it was a "magical" levitation. Fast forward to the overnight session when following a muted Asian session, it was once again up to the "magical" USDJPY to send stocks well into the green without any actual catalyst whatsoever, but what merely appears to have been another "magical" intervention session by the BOJ.

Bank Of America Reveals "The Next Big Trade"

Markets have stopped focusing on what central banks are doing and are "positioning for what they believe central banks may or may not do," according to BofA's Athanasios Vamvakidis as he tells FX traders to "prepare to fight the central banks," as the market reaction to central bank policies this year reflects transition to a new regime, in which investors start speculating which central bank will have to give up easing policies first.

Why Currency Traders Are So Confused

"The FX market is confusing this year. More easing by the BoJ, the RBNZ, the Riksbank, the ECB and the Norges Bank, led to stronger currencies, despite delivering more than markets had expected in all cases. The market seems to be taking recent monetary policy easing as evidence that central banks are reaching their limits, as their forward guidance has sent mixed signals."

On Opex Day, It's All About The Dollar: Futures, Oil Levitate As USD Weakness Persists

It may be option expiration day (always leading to abnormal market activity) but it remains all about the weak dollar, which after crashing in the two days after the Fed's surprisingly dovish statement has put both the ECB and the BOJ in the very awkward position that shortly after both banks have drastically eased, the Euro and the Yen are now trading stronger relative to the dollar versus prior. As DB puts it, "the US Dollar has tumbled in a fairly impressive fashion since the FOMC on Wednesday with the Dollar spot index now down the most over a two-day period since 2009" which naturally hurts those countries who have been rushing to debase their own currencies against the USD.

Another Fed "Policy Error"? Dollar And Yields Tumble, Stocks Slide, Gold Jumps

In the aftermath of the Fed's surprising dovish announcement, overnight there has been a rather sudden repricing of risk, which has seen European stocks and US equity futures stumble to roughly where they were when the Fed unveiled its dovish surprise, while the dollar collapse has continued, sparking deflationary fears resulting in treasury yields plunging even as gold soars, all hinting at another Fed policy error. So was that it for the Fed's latest intervention "halflife"? We don't know, but we expect much confusion today over whether even the Fed has now run out of dovish ammunition.

Norway Cuts Rates, Hints At NIRP, QE As Central Bank Falls (Way) Behind In FX Wars

Facing pressure from competitive easing at the ECB, the Riksbank, and the NationalBank, and with low oil prices weighing on the economy even as the dynamics of fiscal stimulus force the Norges Bank to be a reluctant buyer of NOK, Norway relents, cutting rates by 25bps and hinting at further cuts to come. 

Norway’s Interest Rate Conundrum

We are experiencing 1970’s style stagflation, coming from the supply side, not demand. Prices are going up because Norges Bank continues to destroy the Norwegian Krone, turning it into the Nordic Peso. This is where they are “hiding” the damage to save rest of the economy. For example, housing prices will rise in NOK but fall in USD or gold (universal commodity) terms. It’s a shell game, leading to long term decline or even worse, an unexpected period of elevated inflation, requiring a rapid rise in interest rates. 

Consumer Confidence Crashes To 23-Year Low In Norway As Growth Grinds To A Halt

When last we checked in on Norway, we documented the country's currency conundrum which is keeping the krone from depreciating as much as the Norges Bank would probably like in the face of flagging economic growth. On Tuesday we get the latest data out of the country and sure enough, GDP growth has flatlined. A rate cut next month is now virtually assured. 

Germany Unveils "Cash Controls" Push: Ban Transactions Over €5,000, €500 Euro Note

On Tuesday we got the latest evidence that officials across the globe are preparing to institute a cashless “utopia” when Handelsblatt reported (in a piece called "The Death of Cash") that the Social Democrats - the junior partner in Angela Merkel’s coalition government - have proposed a €5,000 limit on cash transactions and the elimination of the €500 note. Berlin is using a familiar scapegoat to justify the plan: the need to fight "terrorists" and “foreign criminals."

Norway's Kroner Conundrum Deepens As Central Bank Buys Record Amount Of Currency

This is the paradox for Norway: the country needs to buy NOK in order to fund stimulus and support the economy. But by doing so, the Norges Bank is putting upward pressure on the currency at a time when it really needs to depreciate. In other words, what Norway must do to pay for stimulus (buy kroner) is indirectly hurting the economy by keeping the NOK from depreciating and functioning as a counter cyclical buffer.

Norway Pushes Panic Button: "We're In A Crisis Now, We Can't Deny That"

Slumping crude prices are weighing heavily on Norway's economy as the government looks to its $830 billion sovereign wealth fund to plug budget holes and pay for fiscal stimulus. Officials hope a weaker krone can serve as a shock absorber but with Mario Draghi stuck in easing mode, that may prove to be an increasingly dubious proposition.