Further weakness awaits NOK in the next months – Danske Bank

Analyst at Danske Bank Tomas Rosenlund suggested that the Norwegian Krone is expected to depreciate further in the medium term.

Key Quotes

“In the Scandies, yesterday’s oil investment survey out of Norway was somewhat on the weaker side of expectations, marking yet another recent disappointing data print”.

“Given the housing market situation in Oslo and Norges Bank’s neutral stance from September, markets have correctly not priced in a more dovish monetary outlook in Norway”.

“Yet, the latest releases have amplified the importance of the Regional Network Survey due out on 6 December, as if this (contrary to our own expectations) also disappoints, Norges Bank could well reintroduce an explicit easing bias at the 15 December meeting”.

“Irrespective, we still expect EUR/NOK to move higher on year-end seasonality in coming weeks. In this respect, it is also noteworthy how the weekly FX flow data from Norges Bank shows how foreign banks (proxy for speculative flows) have been net NOK sellers over the past few weeks, as this suggests a reduced ‘fast money’ belief in a near-term NOK rally”.