US dollar firms post FOMC, keeping dollar bears adrift.

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Bank of England today. Sterling is got a boost overnight on reports that the White House is set to announce a trade deal later today that will likely be on quite good terms, given the traditional “special relationship” of the two countries and because the UK-US trade relationship is in relative balance. A 25-bp cut is priced for today, but forward guidance is hotly anticipated, as the June meeting is priced near 50/50 for an additional move. I still lean for a dovish surprise. The EURGBP comeback yesterday was short-circuited by the trade deal anticipation, but clearly the 0.8500-0.8450 area looks pivotal for whether EURGBP returns to the lower range or finds support.

Sweden Riksbank today. Many, including myself, thought that Sweden’s Riksbank was done with cutting rates, but the country’s core inflation rate has dropped faster than forecast and growth is at 0% with trade-related uncertainties ex-Europe mounting. This gives the Riksbank the luxury of forecasting at least a drop of the rate to 25 basis points later this year (already priced), but a more dovish rate forecast is possible, which could weigh on SEK after its dramatic repricing versus the Euro in February-March.

Norges Bank Deposit Rate announcement. Norges Bank tripped embarrassingly over its guidance to cut rates in March, which it didn’t do. NOK has been through a bit of trauma on Liberation Day tariff announcements and the plunge in oil prices, which saw EURNOK ripping higher to the huge 12.00+ level, which seems to be the ceiling. The Norges Bank won’t move today and will likely continue to flag easing later this year. I am constructive on NOK upside potential versus EUR and possible versus SEK if Riksbank leans a bit dovish today.

FX Board of G10 and CNH trend evolution and strength.
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The US dollar has a lot of further rallying to do if it want to neutralize even our relatively short-term trending indicator, but note the significant two-day momentum shift. Signals elsewhere are weakening, suggesting a market that is losing steam in volatility terms.

Table: NEW FX Board Trend Scoreboard for individual pairs.
The JPY bulls are suffering as this latest reversal in all JPY crosses is backing up as the JPY can’t find follow-on momentum. EURNOK has switched into a downtrend – likely needs Norges Bank and bit more support in the oil market for some help. Watching NOKSEK for upside trend potential in coming days as well.