24 Jun 2013
Flash: EUR/NOK higher post soft Norges Bank - Danske Bank
FXstreet.com (Barcelona) - Danske Bank analysts note that EUR/NOK continued to move higher on Friday after the surprisingly soft Norges Bank on Thursday.
They see that the cross has been trading above 8.00 for the first time since 2010 and the move was probably accelerated by stops and unwinding of long NOK/SEK positions, as the latter tested levels below 1.10 not seen since 2008. They believe that the majority of long NOK positions has now been washed out, especially as the weekly flow data from Norges Bank had not indicated a heavy NOK positioning ahead of the Norges Bank meeting. They finish by writing, “Of course the same caveats apply as for SEK. The focus on Fed tapering does in general not bode well for smaller carry currencies. On top of that, NOK might be exposed due to the general avoidance of commodity currencies that the stepped-up focus on China and ‘the end of the super cycle in commodities’ have created.”
They see that the cross has been trading above 8.00 for the first time since 2010 and the move was probably accelerated by stops and unwinding of long NOK/SEK positions, as the latter tested levels below 1.10 not seen since 2008. They believe that the majority of long NOK positions has now been washed out, especially as the weekly flow data from Norges Bank had not indicated a heavy NOK positioning ahead of the Norges Bank meeting. They finish by writing, “Of course the same caveats apply as for SEK. The focus on Fed tapering does in general not bode well for smaller carry currencies. On top of that, NOK might be exposed due to the general avoidance of commodity currencies that the stepped-up focus on China and ‘the end of the super cycle in commodities’ have created.”