EUR/NOK seen at 9.50 in 1-month – Danske Bank

According to analysts at Danske Bank, the cross is expected to head towards the 9.50 region in a month’s view.

Key Quotes

“While we got the EUR/NOK direction on a ‘leave’ vote right (despite coinciding EUR weakness), we overestimated the short-term downside potential in oil prices”.

“Having said this, ‘Brexit’ still significantly increases the uncertainty related to the economic outlook of Norway’s closest trading partners. This, in turn, increases the need for maintaining a weak currency in the current transition phase with low and only a gradually improving growth outlook”.

“We expect Norges Bank to cut rates by 25bp in September and likely again in December to 0% (c. 35bp priced on a 12M horizon). We forecast EUR/NOK at 9.50 in 1M (from 9.40), 9.40 in 3M (9.30), 9.20 in 6M (9.10) and 9.00 in 12M (8.90)”.