NOK between oil and the Norges Bank – Danske Bank

Senior Analyst at Danske Bank Pernille Henneberg assessed the current prospects for the Norwegian Krone.

Key Quotes

“The NOK strengthened a bit yesterday after it was revealed that Norges Bank’s regional network survey dropped marginally to 0.73 (expected: 0.7) from 0.75 in August”.

“Although this indicates growth in mainland GDP of around 0.4% q/q for the next two quarters, a bit weaker than expected by Norges Bank in MPR 3/16 (roughly 0.45% q/q), the deterioration of the growth outlook was not, in our view, sufficient to trigger another rate cut expectation, as the housing market represents an increasing risk to the stability of the economy and the economy after all seems to have avoided a recession”.

“However, the EUR/NOK came under pressure as oil prices dropped on stories that OPEC production increased in November on the back of production increases in Angola, Libya, and Nigeria. The lower oil prices may also reflect the market’s lingering doubt about compliance to the OPEC deal and we may see further buying of EUR/NOK if oil prices drop further going into this weekend’s meeting between OPEC and non-OPEC countries on sharing the cut in oil production”.