EUR/NOK seen sidelined between 9.2500/9.4000 – Danske Bank

Allan von Mehren, Chief Analyst at Danske Bank, believes the cross should keep the current consolidative theme in the near term.

Key Quotes

“With last week’s Norges Bank message, FX markets will increasingly turn focus to capacity utilisation in the Norwegian economy as this ultimately seems the most likely trigger for Governor Olsen to deliver an earlier-than-projected rate.

“Norges Bank does not pencil in any rate hike before Q3 19, which to us underlines that we will have to see very significant positive surprises in this week’s labour market reports for EUR/NOK to break substantially lower on higher NOK rates. Our base case for the coming weeks therefore remains that the cross is a 9.25- 9.40 range play”.

“Meanwhile, going into year-end we see several NOK headwinds, one of which is a turnaround in the Chinese cycle. Investors and clients exposed to NOK FX movements should have this in mind when evaluating the near-term NOK potential”.