EUR/NOK still poised to further decline – Danske Bank

Piet Christiansen, Senior Analyst at Danske Bank, noted the Norwegian Krone is seen appreciating further in the next months.

Key Quotes

“In the Scandies, this week will bring both sets of the Norwegian unemployment reports (LFS and NAV)”.

“Last week, Norges Bank surprised markets by lowering the rate path slightly which – despite an actual rate hike – led to a weaker NOK”.

“One of the arguments that Norges Bank used for lowering the rate path was somewhat weaker capacity utilization than previously expected. As a result, the labour market releases this week will be important for markets in evaluating the validity of this argument”.

“We remain short the EUR/NOK spot outright as we highlight other factors than just Norges Bank’s rate setting supporting a lower cross”.