16 Feb 2015
EUR/NOK still seen at 8.25 in 6-month – Danske Bank
FXStreet (Edinburgh) - Analyst at Danske Bank Kristoffer Lomholt believes the cross will head towards the 8.25 area in a 6-month view.
Key Quotes
“While the NOK weakened on the back of a proactive Riksbank last Thursday, EUR/NOK has since gradually edged lower on the back of ‘no-panic’ comments from Norges Bank governor Olsen and a general rebound in oil prices Friday amid a continued drop in total US rig counts and leading oil companies announcing capital expenditure cuts”.
“However, we do still expect Norges Bank (NB) to cut rates by 25 bps in March as oil prices remain significantly lower than the December projection”.
“This expectation is also supported by the Riksbank rate cut and should temporarily weigh on the NOK as a full NB rate cut has yet to be priced in the markets”.
“Post March we expect a significant drop in EUR/NOK as the Norwegian economy remains healthy, Norges Bank is re-priced, oil prices continue to recover and ECB QE plays out. We target EUR/NOK at 8.50 in 3M and 8.25 in 6M”.
Key Quotes
“While the NOK weakened on the back of a proactive Riksbank last Thursday, EUR/NOK has since gradually edged lower on the back of ‘no-panic’ comments from Norges Bank governor Olsen and a general rebound in oil prices Friday amid a continued drop in total US rig counts and leading oil companies announcing capital expenditure cuts”.
“However, we do still expect Norges Bank (NB) to cut rates by 25 bps in March as oil prices remain significantly lower than the December projection”.
“This expectation is also supported by the Riksbank rate cut and should temporarily weigh on the NOK as a full NB rate cut has yet to be priced in the markets”.
“Post March we expect a significant drop in EUR/NOK as the Norwegian economy remains healthy, Norges Bank is re-priced, oil prices continue to recover and ECB QE plays out. We target EUR/NOK at 8.50 in 3M and 8.25 in 6M”.