EUR/NOK downside potential limited near term – Danske Bank

Senior Analyst at Danske Bank Jens Pedersen assessed the recent rate hike by the Norges Bank and the prospects for NOK.

Key Quotes

“Yesterday’s dovish Norges Bank rate path was naturally a blow to our short EUR/NOK trade recommendation (despite the actual rate hike being delivered)”.

“That said, the revised rate path more or less mirrored market pricing ahead of the announcement, which limits the NOK setback. In addition, we still think the four headwinds that we have been referring to lately are either stabilising or becoming direct tailwinds”.

“As a result, we still like to hold on to our short EUR/NOK position but acknowledge that the near-term potential has become more limited than pencilled in previously”.