Strategists at Credit Suisse continue to target EUR/NOK at 10.00 by the end of Q3. They think that rallies in the pair towards the Q1 highs around 10.48 will offer attractive entry points for new shorts.
Some patience might be required for pro-NOK fundamentals to play out
“We suspect that domestic drivers will remain on the backburner in the near-term. Our assumption is that external factors will remain in the driver seat.”
“We think a bullish NOK target remains appropriate, and we continue to target EUR/NOK at 10.00 by the end of Q3. Norges Bank has shown more willingness than other central banks to upgrade its rate path in the face of stronger data, and conversely to look past weak data. The bank does not have a QE program to unwind, making the messaging cleaner than other central banks juggling several tools.”
“Locally, the country has had relative success in controlling COVID-19, even amid recent hiccups. We suspect however that some patience might be required for these factors to play out in a NOK supportive fashion in current market conditions, and that investor interest in NOK might remain limited until we are closer to 23 Sep interest rate decision.”
“Strategies aiming for a swift move towards our medium-term target of 10.00 and below will still face obstacles. But with longer-term fundamentals still in place, we think that rallies in EUR/NOK towards the Q1 highs around 10.48 will offer attractive entry points for fresh shorts.”
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