Add shorts to EUR/NOK – Danske Bank

Senior Analyst at Danske Bank Christin Tuxen sees the Norwegian Krone gathering pace in the next months.

Key Quotes

“In the Scandi region, EUR/SEK and EUR/NOK have diverged in recent days as the market is speculating on a removal of the Riksbank easing bias next week”.

“Meanwhile, the uptick in oil prices has been unable to work against the EUR uptrend initiated by Mario Draghi earlier in the week. This highlights the importance of the EUR leg as 66% of the move higher in EUR/NOK since the February bottom can be explained by a stronger EUR”.

“While we still emphasise a cautious tactical stance to the NOK, we find the latest rates FX decoupling slightly overdone as the weaker NOK supports the inflationary outlook/output gap in Norway. Hence, despite challenging externals, we have become slightly less cautious on the NOK near term than previously. Strategically, we still find value in building up short EUR/NOK exposure”.