NOK’s outlook stays bullish but cautious – Danske Bank

Chief Analyst at Danske Bank Allan von Mehren noted the positive outlook on the Norwegian Krone stays unchanged.

Key Quotes

“In the Scandies, yesterday’s flow data from Norges Bank showed that foreign banks (proxy for speculative flows) last week reduced their long NOK bets for the third consecutive week, albeit the reduction was marginal relative to the previous week’s long covering”.

“On an aggregate scale, we estimate that speculative NOK positioning is neutral. More balanced positioning amid improved domestics might be a reason for why the NOK has not sold off more in the ‘red’ risk environment, yet history shows externals usually dominate when risk appetite sours”.

“We are strategic bullish on the NOK via options but from a tactical perspective, we keep our cautious stance”.