SEK and NOK: Fade the weakness, NOK in particular - Nomura

In view of analysts at Nomura, a slowing housing market gives the Riksbank more of a reason to remain cautious in December, but they doubt it will fundamentally change its medium-term outlook.

Key Quotes

“We think Sweden’s economy should hold up well to the housing market slowdown. As a result, we think the market’s view that Scandinavian central banks will be able to normalise faster (and ahead) of the ECB should remain intact.” 

“NOK has been a victim of the Swedish housing market concerns and fundamentally little has changed. We remain short EUR/NOK and think current levels are very attractive for short positions. A soft landing for Norway’s housing market looks likely and the inflation outlook is improving. EUR/SEK has moved beyond fundamentals and should drift lower as housing concerns recede, but as negative sentiment remains and we expect the Riksbank to remain dovish in December, we think this will likely take more time. From a relative value perspective, we expect NOK/SEK to move towards 1.05 in the coming months.”