EUR/NOK tied to the 11.50 mark until the external environment swings – ING

Norges Bank hikes and promises one more in December. Despite the hawkish surprise, EUR/NOK has remained attached to the 11.50 gravity line. Economists at ING analyze the pair’s outlook.

Krone still waits for external cues to rally

Norges Bank delivered a well-telegraphed 25 bps hike today, but surprised markets by signalling rates will likely be increased again to 4.50% in December and left at that level throughout 2024.

Once the US story and the Dollar turn lower, NOK should be at the forefront of the rally in pro-cyclical currencies, and today’s hawkish hike by Norges Bank endorses this view. 

For now, however, 11.50 is the gravity line, and only a change in external conditions seems likely to shake NOK from its low-volatility torpor.