In Norway, economists at Danske Bank now expect 5 hikes by the end of 2022. Notwithstanding, they stick to the view that EUR/NOK is set to move towards higher as relative rates matter less than the direction of the dollar and global reflation.
Peak reflation to weigh on NOK despite NB rate hikes
“While higher NOK rates in isolation are supportive of a stronger NOK we still highlight that relative short-end rates are an inferior driver of NOK relative to the global reflation theme.”
“The biggest risk factors to our forecasts lie in the global reflation theme and thereby not least USD real rates, risk appetite, oil and vaccine rollouts. Better news and/or a more patient Fed than in our baseline would support reflation underpinning a continued strengthening of NOK. On the other hand, marked risk-off could trigger a larger-than-projected setback”
“As we now expect 5 hikes by end 2022 we lower our EUR/NOK forecast profile slightly but stick to the view that cross is set to move higher over the coming year on peak reflation. We forecast the cross at 10.20 in 1M (previously 10.10), 10.30 in 3M (unchanged), 10.40 in 6M (unchanged) and 10.40 in 12M (10.50).”
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.