NOK ready to resume the upside – Danske Bank

Chief Analyst at Danske Bank Christin Tuxen believes the Norwegian Krone should appreciate further in the next months.

Key Quotes

“EUR/NOK has come off recent highs on the back of a strong set of data releases (NAV, PMI) and not least of all a SEK revival in recent days. In our view, the very near-term NOK outlook is in the hands of the SEK (Riksbank meeting + election), which alongside structural NOK liquidity in our view, has been the main ‘culprit’ of the weaker NOK during August”.

“Meanwhile, (1) we are now approaching the Norges Bank September rate hike, (2) structural liquidity is set to turn NOK positive over the coming weeks, (3) spot/forward liquidity is improving, (4) the data calendar looks NOK-positive to us, (5) positioning looks NOK-favourable and (6) we will soon get more clarity on Swedish politics (indeed a lot of SEK negativity seems priced by now). Thus we think it makes sense to be short EUR/NOK”.