Norges Bank is the sole hawk in town – Danske Bank


Danske Bank analysts point out that Norges Bank remains the sole G10 central bank hiking policy rates after it hiked policy rates by 25bp at the June meeting.

Key Quotes

“More importantly the central bank maintained its clear tightening bias by signalling roughly two hikes over the coming year with the next one due already in September. This leaves Norges Bank as the sole G10 central bank hiking rates. So far, the relative rates’ impact on the NOK has been muted but we expect this to change as the carry in the NOK catches up alternatives in AUD, NZD and CAD.”

“The important Regional Network Survey indicated growth in coming quarters of around 0.8% q/q, which is above trend potential and suggests that domestic wage pressures will continue to rise. This, in turn, has implications for inflation, as it means there now is less room for higher imported inflation – and hence a weaker NOK – if Norges Bank is to fulfil its 2% inflation target.”

“The NOK has suffered from foreign selling amid the escalating US/China trade war, lower oil prices and falling global inflation expectations. The decoupling from relative rates has been very pronounced over the past year and while a slowing China and the existence of more attractive commodity carry alternatives can partly explain NOK weakness, we still think the fundamental NOK backdrop is key to remember. As long as the global economy does not fall into a recession, global petroleum industries do not collapse and Norwegian competitiveness does not erode, the NOK would have to strengthen for Norges Bank to fulfil its inflation target.”

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.

Feed news

Latest Forex News

Editors’ Picks

EUR/USD remains depressed but off daily lows

The EUR/USD pair is recovering from a daily low of 1.1216, although holding in negative territory for the day. US preliminary Michigan Consumer Sentiment Index improved by less-than-anticipated in July, coming in at 98.4 vs. the 98.5 expected.

EUR/USD News

GBP/USD trading marginally lower daily basis but above 1.2500

The Pound gave back some of its Thursday’s gain on dollar’s relief. The GBP/USD pair broke a daily descendant trend line coming from June’s high and holds above it, leaving little room for sellers to act.

GBP/USD News

USD/JPY: bears pausing, still in control

Japanese National Inflation steady at 0.7%YoY in June. US Michigan Consumer Sentiment Index expected at 98.5 in July. USD/JPY corrective advance falling short of signaling an interim bottom in place.

USD/JPY News

Gold consolidates around $ 1440, eyes US data for fresh direction

Gold (futures on Comex) extends its side-trend around the 1440 mark into the mid-European session, having stalled its retreat from 2019 highs of 1454 near 1437 region.

Gold News

Something has spooked the Fed

We wish we knew what it is. Wild talk of the US joining Japan and Europe with zero or negative return on the 10-year is or should be very frightening.

Read more

MAJORS

Cryptocurrencies

Signatures


  •  
  •  
  •  
  •  
  •