EUR/NOK: Year-end forecast lowered to 10.50 on a stronger krone

Over the last three months, the NOK has been the top performing major versus both the USD and EUR as monetary policy having reached the lower bound and the central bank’s predisposition towards monetary normalisation, albeit not until 2022, has helped drive the momentum. Jeremy Stretch from CIBC Capital Markets foresees the EUR/NOK pair trading at 10.80 and 10.50 by the third and fourth quarter respectively.

Key quotes

“The central case scenario as presented by the Norges bank at their June meeting did not foresee a hike until Q4 2022. The more hawkish bias, especially compared to their peers, was a result of better than expected data. The mainland economy contracted a mere 2.1% in Q1, while monthly GDP moved back into positive territory into May. The mild contraction ahead of a modest rebound led the Norges bank to revise up their estimates for the 2020 contraction. They now assume a subconsensus 3.5% contraction, followed by a 3.7% rebound next year. Helped by solid fiscal expansion, the economy is set to regain its lost output in a little over a year.”

“Rising oil revenues, monetary policy stability, solid fiscal impulses – fuelling potential repatriation flows – and upgrades to macro assumptions, provides a supportive NOK backdrop. Having tested previous Q4 targets we have lowered the end year forecast to 10.50.”

Share: Feed news

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.