EUR/NOK: Neutral view around current levels of 10.07 after targeting 9.90 – Credit Suisse

Economists at Credit Suisse are now neutral on the Norwegian krone. They target EUR/NOK at 10.07 and expect the pair to remain within a 9.95-10.20 range in Q1.

Outlook continues to validate the Norges Bank’s tightening plans

“We are now neutral on EUR/NOK.”

“We target 10.07 in EUR/NOK and expect the pair to remain within the Q1 2022 range of 9.95-10.20.”

“Norway’s data is still strong enough to justify the Norges Bank’s tightening cycle, but we struggle to see a fresh driver for further appreciation of tightening expectations in the near-term.” 

“Year to date, exposure to tensions between Russia and Ukraine has materialized in the form of reduced EUR/NOK correlation with oil prices (with lower fiscal spending also likely being a driver of weak correlation). This leaves scope for a swift recovery in NOK if tensions subside.” 

“We would also prefer to wait for clearer indications that strong data can drive upgrades to monetary policy expectations before becoming bullish on NOK once again.”