NOK/SEK stabilization should be short-lived – Danske Bank

Chief Analyst at Danske Bank Allan von Mehren expects the ongoing stabilization around NOK/SEK to be short-lived.

Key Quotes

“In the Scandies, NOK/SEK has stabilised following the more positive sentiment regarding Chinese economy seen towards the end of last week that triggered a surge in Chinese stocks and the copper price”.

“However, in our view the stabilisation will likely prove short-lived as the global business cycle is turning lower and the oil prices is weighed down by bearish fundamentals”.

“Today, NOK and SEK will likely trade in line with overall risk sentiment as argued above, as the market awaits the release of the Norwegian Regional Network Survey, Swedish CPI and OPEC oil market report tomorrow”.

“Note that speculative positioning in oil and copper remains net long and neutral respectively. Hence, from a positioning point of view there is downside risks

to industrial commodity prices near-term and thus risk of negative spill-over to NOK/SEK”.