Clear evidence of disinflation and rate cuts abroad neeed for a sustained NOK rally – Nordea
|NOK had a good day on Tuesday after the US CPI figures came in a tad better than expected. Economists at Nordea analyze Krone’s outlook.
EUR/NOK seen closer to 11.00 and USD/NOK around 10.00 in one year’s time
For the NOK to strengthen on a sustained basis, rates abroad need to be cut and for that to happen the disinflation process needs to continue at such a pace that central banks believe 2% will be reached on a sustained basis. This will take time.
After next summer, we expect a couple of rate cuts from the ECB (and perhaps even from the Fed) to support the NOK. Moreover, China’s stimulus measures should be beneficial for the economy and commodity markets in the year to come. This is why we see EUR/NOK closer to 11.00 and USD/NOK around 10.00 in one year’s time.
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