25 Mar 2015
Weakness around NOK remains unchanged – JP Morgan
FXStreet (Edinburgh) - Despite the Norges Bank refrained from easing further in its last meeting, analysts at JP Morgan believes there is further weakness on the cards for the krone.
Key Quotes
“The Norges Bank delivered a hawkish policy surprise in holding rates steady when around -27bp was priced”.
“Even though the thrust of the forecast revisions was actually quite dovish (the Norges Bank cut its end- 2017 rate projection by 56bp, and showed a rate cut with certainty by the late summer), NOK surged due to extent of consensus short positioning which had been built up around this meeting”.
“We are not convinced that sell-off in EUR/NOK has much further to run, certainly not with the oil market remaining sloppy, but we nevertheless closed out the EUR/NOK long as we recognize that the risk of another policy-inspired lurch lower in NOK has been neutralized for the time being”.
“The cue to consider re-entering NOK shorts would be convincing evidence of a more aggressive slowdown in Norwegian growth that opens up the way for the for the Norges Bank to cut not just once but twice more”.
Key Quotes
“The Norges Bank delivered a hawkish policy surprise in holding rates steady when around -27bp was priced”.
“Even though the thrust of the forecast revisions was actually quite dovish (the Norges Bank cut its end- 2017 rate projection by 56bp, and showed a rate cut with certainty by the late summer), NOK surged due to extent of consensus short positioning which had been built up around this meeting”.
“We are not convinced that sell-off in EUR/NOK has much further to run, certainly not with the oil market remaining sloppy, but we nevertheless closed out the EUR/NOK long as we recognize that the risk of another policy-inspired lurch lower in NOK has been neutralized for the time being”.
“The cue to consider re-entering NOK shorts would be convincing evidence of a more aggressive slowdown in Norwegian growth that opens up the way for the for the Norges Bank to cut not just once but twice more”.