EUR/NOK to move back at 10.00 by year-end as Norges Bank delivers another hawkish tilt – ING
|Norges Bank revised up the rate path yet again. The key rate was increased to 0.25% and the next hike will come in December. EUR/NOK broke decisively below 10.1000 after the policy decision release. Economists at ING expect the Norwegian krone to emerge as a key outperformer in risk-on periods thanks to its attractive yield profile.
NOK set to benefit from attractive yield profile
“The 25bp rate hike today was not at all a surprise to markets, and it was likely the announcement that another hike will likely come in December – and an upgrade in longer-term rate projections – that generated some lift on NOK.”
“The latest interest rate projections imply a further three or four rate hikes by the end of 2022.”
“Today's statement is likely reinforcing the degree of trust among investors that the Norges Bank will not underdeliver when it comes to following their projected tightening plan. The dissipation of some tail risks for global sentiment in the longer run may leave room for the NOK – backed by tightening cycles – to emerge as an outperformer.”
“We expect to see EUR/NOK back at the 10.00 level by the end of the year, and also expect to see it trade consistently below the 10.00 mark in 2022. We think such a gradual appreciation profile for NOK will not tamper with the Norges Bank monetary tightening plans.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.