EUR/NOK faces further consolidation – Danske Bank

Senior Analyst at Danske Bank Mikael Milhoj expects the Norwegian Krone to trade in a consolidative fashion for the rest of the current year.

Key Quotes

“In terms of EUR/NOK, the cross has stabilised at levels just above the 9.10 threshold”.

“Price action post last week’s Norges Bank policy announcement has fit nicely with the central bank’s revised NOK forecasts, which implicitly showed that the central bank was well aware that it would surprise markets in a hawkish direction”.

“We note that Norges Bank has only pencilled in a 0.6% appreciation of the NOK over the coming year, highlighting how a stronger NOK and/or a marked disappointment in data could trigger a rate cut. In our base case, we expect neither of the two, and pencil in a range trading EUR/NOK for the rest of 2016, with the balance of risk skewed to a temporary spike higher”.

“In a ‘Norway empty’ calendar, we expect the cross to follow oil prices and global risk sentiment today”.