20 Mar 2015
EUR/NOK around 8.15 in 12-m – Danske Bank
FXStreet (Edinburgh) - The Norwegian krone is expected to gather pace in the longer term, reverting initial weakness, suggested analysts at Danske Bank.
Key Quotes
“Norges Bank surprised markets significantly by not cutting rates. Norges Bank did lower the rate path indicating a single rate cut (in June)”.
“We expect a single 25bp rate cut in June but that NB will leave rates unchanged thereafter. Markets are pricing in two full 25bp rate cuts: one in June 2015 and another in December 2015”.
“We consequently expect a long-run re-pricing of Norges Bank to play out”.
“In the short-term we expect the downside risk to the oil price to limit the upside potential in the NOK. Our fundamental bullish view of the NOK, however, is unchanged. We lower our 1M target to 8.65 (previously 8.75) but maintain our 3M, 6M and 12M forecasts of 8.50, 8.25 and 8.15, respectively”.
Key Quotes
“Norges Bank surprised markets significantly by not cutting rates. Norges Bank did lower the rate path indicating a single rate cut (in June)”.
“We expect a single 25bp rate cut in June but that NB will leave rates unchanged thereafter. Markets are pricing in two full 25bp rate cuts: one in June 2015 and another in December 2015”.
“We consequently expect a long-run re-pricing of Norges Bank to play out”.
“In the short-term we expect the downside risk to the oil price to limit the upside potential in the NOK. Our fundamental bullish view of the NOK, however, is unchanged. We lower our 1M target to 8.65 (previously 8.75) but maintain our 3M, 6M and 12M forecasts of 8.50, 8.25 and 8.15, respectively”.