EUR/NOK poised for further weakness – Danske Bank

Senior Analyst at Danske Bank Piet Christiansen believes the Norwegian Krone could appreciate in the next months.

Key Quotes

“In terms of the Scandies, yesterday we recommended positioning for the next move lower in EUR/NOK via a 3M bearish ratioed risk reversal”.

“The key argument behind the trade is that we expect Norges Bank initiating its hiking cycle to become an important theme for FX markets in the coming weeks, which should dominate the NOK headwinds that we have referred to continually in recent months”.

“Note, we still have a tactical NOK/SEK position on as a direct play on continued SEK support and rangy EUR/NOK. We contemplate closing the position but want to await Thursday’s Swedish inflation report where we have an above-Riksbank forecast call. We will look to close the position ahead of the Norges Bank meeting next week”.