Among G-10 currencies, the Norwegian krone has suffered the most over the last couple of weeks, according to our FX Board measure of trend strength (see below). Yesterday’s Norwegian April CPI release was far higher than expected at 5.4%, which is a 13-year high and makes the Norges Bank recent decision to continue with mere 25 basis point rate hikes every quarter an excessively slow pace. EURNOK traded briefly to a new high for the year above 10.23, having entirely reversed its run lower below 9.50 (!) as the commodity theme in FX has stumbled badly since an early-mid April peak.
Inflation is high in the CEE countries, with Romania today reporting a CPI rise in March of 13.8% year-on-year and a month-on-month rise of a 3.7%, both far higher than expected. Given that the most recent wage data from February in Romania shows wages rising at a greater than 10% pace, this is not as alarming, if still the highest inflation print I have seen anywhere in CEE or developed Europe. Which takes us to Hungary: I have spotlighted Hungary’s stunning +32% wage rise in March just ahead of the April election and inflation there is supposedly at 9.5%, actually south of what the Netherlands reported in both March and April (9.7% and 9.6%), much less what Romania is suffering in the way of inflation. To be fair, Hungary’s wage rises were at more like 10% for much of the last two years and some of the March figures were from one-off bonuses to public sector employees clearly meant to tilt the election in Orban’s favour, but the situation bears watching there even as forint (HUF) has taken all of this in reasonable stride, helped by the central bank’s 5.4% policy rate and 6.45% deposit rate.
Note that Australian Westpac consumer confidence cratered in April to 90.4 from 95.8 in April, taking it near or below 90 for the first time since the pandemic outbreak months and before that in the global financial crisis years of 2008-09 with a single blip in 2011 below 90.
Table: FX Board of G10 and CNH trend evolution and strength.
The Euro getting some respect in the crosses even if attempts to bounce versus the strong US dollar have not impressed. The JPY momentum has turned net positive, but still not much of a signal there. Note NOK’s weakest-of-G10 status of the last couple of weeks.