No changes seen in Norges Bank and Riksbank – Danske Bank

According to Senior Strategist at Danske Bank Sverre Holbek, both Nordic central banks area expected to remain ‘on hold’ in the near term.

Key Quotes

“Among the Scandies, EUR/NOK edged lower today despite the drop in oil prices and the upside EUR momentum”.

“We still see value in playing a limited rebound in NOK/SEK, e.g. by selling an upside-skewed near-term straddle like the 3M one”.

“This is a play that Norway will continue to fare well and thus that Norges Bank will stick to its ‘neutral’ stance near term, but also one that the Riksbank will stay cautious and prefer to err on the dovish side in September”.

“Regarding the latter, we stress that there is a risk the Riksbank will need to actively signal it is in wait-and-see-mode to keep EUR/SEK above afloat – otherwise it may be seen by the market as an endorsement of the move lower in EUR/SEK since late June, which Stefan Ingves and co are probably not ready for just yet with the latest inflation uptick set to be temporary”.