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Daily FX View: SEK Lower On Rate Cut; GBP Lower On Soft CPI, PPI

EUR higher, German ZEW beats estimates, AUD/NZD reached new lows since 2008 on divergent
economic and fiscal outlooks
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• SEK lower vs 19 of 23 FX peers after Riksbank cuts rate 25bps to 0.75%
- Cut not fully priced; 6 of 22 estimates in Bloomberg survey called for no change
- SEK paring losses as Riksbank sees slow rate increases beginning 2015
- EUR/SEK +0.08% at 9.0575, session range 9.0065/9.0893
-- View: Bearish bias
--- Consolidating below Dec. high since 2012
--- Momentum weakening: MACD differential, RSI lower, stochastics at high since late-Nov.
--- Support: 9.0051 Nov. high; 8.8200 Dec. 4 low
--- Resistance: 9.0986 Dec. high; 9.1711 May 2012 high
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• GBP weakening after soft PPI, CPI reports
- PPI output for Nov. -0.2% m/m vs est. unch.
- CPI 0.1% vs est. 0.2%, y/y 2.1%, est. 2.2%, nearing BOE target
- GBP/USD +0.01% at 1.6299, session range 1.6287/1.6336
-- View: Bearish bias
--- Down from 1.6646 seen Dec. 10, new high since 2011
--- Momentum trending lower
--- Support: ~1.6260 Oct. 1, 23 highs, Dec. 13 low; 1.6236 Oct. 22 close
--- Resistance: 1.6646 Dec. 10 high; 1.6618 Aug. 2011 high
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• EUR higher vs 16 of 23 FX peers, little response to stronger-than-forecast German ZEW, Dec. current conditions 32.4 vs est 29.9, prior 28.7; high since June 2012
- ZEW expectations 62.0 vs 55.0, prior 54.6; high since 2006
-- Expectations nearing cyclical top, which suggests current conditions to rise another ~20 months
- EUR/USD +0.07% at 1.3772, session range 1.3752/1.3782
-- View: Bearish
--- Consolidating below Dec. 11 high since Oct.
--- Momentum indicators down from overbought levels consistent with EUR tops since Sept. 2012
--- Support: 1.3711 Feb. 1 high; 1.3622 Nov. 29 high
--- Resistance: 1.3811 Dec. 11 high; 1.3832 Oct. 25 high
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• AUD/NZD
- AUD/NZD -0.4% at 1.0789, session range 1.0786/1.0837
- Falling to new lows since 2008
-- Support: 1.0648 2008 low; 1.0432 2005 low
-- Resistance: ~1.12 Aug., Sept. lows; 1.1313 Nov. 20 high
- New Zealand projects bigger budget surpluses, cuts borrowing; Australia sees wider budget deficits, RBA minutes for Dec reiterate currency too high
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• NOTE: TJ Marta is an FX strategist who writes for First Word. The observations he makes are his own.

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TJ Marta
Wharton '86, NYU '98
Bloomberg First Word
FX Strategist