EUR/NOK points to further rangebound near term – Danske Bank
|Allan von Mehren, Chief Analyst at Danske Bank, expects the cross to keep the sideline theme for the time being.
Key Quotes
“We do not see yesterday’s message from Norges Bank as a game changer. Overall, we still see EUR/NOK as a near-term range play, which seems to be reflected also in option markets as the short end (<3M) of the NOK volatility curve has dropped”.
“Over the past few weeks, we have argued that the correction risk for a weaker NOK has risen given not least speculative positioning”.
“Meanwhile, with yesterday’s slight surprise, we think this correction risk has diminished as the potential for relative rates sending the NOK higher in the remainder of 2017 has increased somewhat”.
“Meanwhile, we still see the balance of risk for the oil price as somewhat on the downside from current levels. Our fundamental predisposition remains to buy the NOK but for now, we still prefer to await better entry levels”.
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