Analysts at Danske Bank are shifting higher their EUR/NOK profile, forecasting the cross at 9.00 in 1M (from 8.90), 8.90 in 3M (8.80),8.70in 6M (unchanged) and 8.70in 12M (unchanged).
“The NOK is caught between two stools. On the one hand, domestics have not been better for many years and accelerating growth with a narrowing output gap is the ideal cocktail for an undervalued currency such as the NOK. Meanwhile, challenging externals have been much more important for the NOK recently, which, together with stretched speculative positioning, were the primary drivers of the latest 30 figure move.”
“As speculative positioning has become much more balanced and as the Fed delivered a ‘dovish’ hike, we think improving domestics could return EUR/NOK below 9.00 over coming months. The biggest risk factor to our call is a global risk-off event weighing on the oil price.”