EUR/NOK still a ‘sell on rallies’ – Danske Bank

Analyst at Danske Bank Aila Mihr noted the cross remains a ‘sell on strength’ for the time being.

Key Quotes

“In terms of the NOK, stabilising risk sentiment and important technical levels versus SEK, USD, EUR were the reasons for yesterday’s initial EUR/NOK setback above 8.87”.

“The government’s proposal of capping the use of oil money is on balance NOK negative news, both directly and indirectly, but as the 3% limit on the oil fund use would but mirror this year’s projected spending, it had little market impact”.

“Also, the proposal makes a reduction in the inflation target to 2.0% (from 2.5%) more likely, which in itself would be NOK positive”.

“Norges Bank’s Governor Olsen’s annual address, which followed the government’s announcement, gave – as expected – no hints about the near-term future of monetary policy. Overall, we want to sell EUR/NOK on rallies and are inclined to sell in the low 8.90s around the 10-13 February highs”.