EUR/NOK seen climbing to 9.60 in the near term – Danske Bank

Kristoffer Lomholt, Senior Analyst at Danske Bank, expects the Norwegian Krone to drop towards the 9.60 area within a month’s view.

Key Quotes

“Over the past month we have seen some of the NOK weakness that we have been calling for materialise. Recently the move has been amplified by risk-off and concerns about the Swedish housing market spreading to the NOK. In the near term, we expect the NOK to track risk sentiment which leaves the currency vulnerable to the weak side at a time of the year where liquidity tends to worsen”.

“Meanwhile, for 2018 we still pencil in a moderately stronger NOK, not least on the back of a further reduction in spare capacity in the Norwegian economy and a currency supported inflationary outlook allowing for the first Norges Bank hike in Q4 2018. Also valuation forces will remain a drag on the cross over the next year”.

“We raise and roll our forecasts profile to 9.60 in 1M (from 9.40), 9.40 in 3M (9.50), 9.20 in 6M (unchanged) and 9.10 in 12M (unchanged).”