Christin Tuxen, Chief Analyst at Danske Bank, remains cautious over the outlook on the Norwegian Krone in the short term.
“EUR/NOK has moved higher over the past few days amid a weakening global risk environment and fall in oil prices”.
“The weak risk sentiment goes well wit h our cyclical lead model, which is pointing to a weakening global business cycle. This is traditionally bearish for risk sensitive assets like the NOK”.
“Although we see strong reasons for the EUR/NOK moving lower as the cross looks to be in overbought territory and a strengthening Norwegian growth picture we are cautious near term due to the fragile risk environment”.
“The weekly flow data from Norges Bank showed yesterday that foreign banks (proxy for speculative flows) were moderate net NOK sellers last week. According to our estimation, this still leaves the NOK positioning roughly balanced at the moment”.