NOK to struggle in an environment of weakening growth, tight monetary conditions and strong USD – Danske Bank
EUR/NOK breached the 11.80 mark despite commodity prices rising over the past month, highlighting the importance of the global backdrop. Economists at Danske bank analyze the pair’s outlook.
No near-term turnaround in store for NOK
We still think NOK first and foremost should be treated as a high beta derivative of the global investment environment and in an environment of weakening growth, tight global monetary conditions and a strong USD, the NOK very rarely performs.
Additionally, the recent rise in long-end yields significantly increases the risk of a hard landing for the global economy. In that light, we also lift the long end of the forecast profile, which entails that we no longer embed a stronger NOK in our 12M forecast horizon. We still think NOK is fundamentally undervalued but we do not see the trigger for a turnaround in the next 12M.
Forecast: 11.90 (1M), 12.10 (3M), 12.10 (6M), 12.00 (12M)
Author
FXStreet Insights Team
FXStreet
The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.
