EUR/NOK points to further downside along the road – Rabobank

Jane Foley, Head of FX Strategy at Rabobank, remains constructive on the outlook for the Norwegian Krone.

Key Quotes

“The Norges Bank turned hawkish in December. However, a more restrained fiscal position and modest wage growth suggest that the pace of rate changes is likely to be moderate, suggesting that upside potential for the NOK vs. the EUR is likely to be contained”.

“Broadly speaking, the Norges Bank is very sensitive to the outlook for its currency. However, its soft import weighted krone is posing little obstruction to a firmer policy. The Norges Bank has signalled it is on course for a rate hike in H2”.

“That said, the market is likely to be highly sensitive to the next round of economic data given a spate of recent disappointments”.