Ella 
Several central banks, including the Reserve Bank of Australia, Bank of Canada, Norges Bank and the Bank of England, have seen extensive repricing (higher interest rates) over the past month. While headline inflation continued to move lower in most regions, core inflation remained sticky in the light of ongoing underlying price pressures in the services sector, and the labor market remained tight. The Fed opted to keep rates steady at its last meeting, but sent a hawkish signal. Instead, Chinese authorities have added more stimulus in Europe to combat the weak recovery. European gas prices have risen by around €50 since the beginning of the month to around 40 MWh, the highest level since early April, a reminder that the European energy situation is fragile and sensitive to many different factors
Downplay recent moves
Over the past month, the foreign exchange market has been characterized by movements in relative interest rates that have driven the spot market, while currencies with the most adjusted central bank outlooks such as the Canadian dollar, Australian dollar, Norwegian krone and British pound have all been among the best performers, while Sweden The krona, dollar and euro underperformed, with the yen not only being affected by a dovish BOJ but also a general rise in global yields, which pushed USD/JPY to new year highs, with EUR/USD trading off gains over the past week Up, trading just below the 110 mark
We maintain our strategic view of lower EUR/USD based on relative terms of trade, real interest rates and relative unit labor costs. Likewise, we see the prospect of further near-term support for the USD despite the Fed’s pause in rate hikes. While we think the recent rise in EUR/SEK has been overdone, we remain bearish on SEK over the medium-term due to relative monetary policy, a gloomy global growth outlook and headwinds in the domestic housing market. We take a negative stance on NOK in the coming months given the global FX mismatch, weak sequential global growth and tightening global liquidity conditions. Taking a closer look, we expect EUR/NOK to trade lower as the strength of the euro fades while NOK makes a comeback in 2023.
A key assumption is that global financial conditions will tighten again, and the risks to this assumption lie primarily in the fact that core inflation falls sharply and the global economy becomes more resilient than we expect.
