EUR/NOK expected to grind lower – Danske Bank

Senior Analyst at Danske Bank Piet Christiansen expects the Norwegian Krone to pick up pace in the next months.

Key Quotes

“A test balloon? It was probably not the Riksbank’s intention, but reducing inflation forecasts and keeping repo rate path intact effectively served as a test balloon as to how the SEK would respond if the market would interpret the combo as a hawkish signal. It was a bold move. It was balanced by soft rhetoric though. Either way, the SEK does not seem to be in the starting blocks for any imminent rally as EUR/SEK moved higher after the Riksbank meeting”.

“Monetary policy will stay in focus to for Scandies with Norges Bank’s Governor Olsen set to hold his annual speech. The base case is that he will not use the annual address to give any policy hint. Tonight's speech will mark the first of several releases over the coming month where we see the balance of risk skewed towards a NOK-positive surprise. We remain short EUR/NOK and long NOK/SEK”.