NOK’s outlook stays cautious – Danske Bank

Kristoffer Lomholt, Senior Analyst at Danske Bank, remains cautious on the perspective for the Norwegian Krone.

Key Quotes

“EUR/NOK testing New Year highs yesterday amid souring risk appetite, a lower oil price and after the monthly house-price statistics revealed very weak house-price growth”.

“While this is significantly lower than Norges Bank’s own forecast from the last monetary policy report, we do not see this in itself as an argument for an outright lower rate path at the forthcoming meeting, but it clearly reduces the upside pressure on rates”.

“Having said that, it does remove an ‘obstacle’ for NB turning more dovish at a later stage should inflation disappoint markedly. Irrespective, given the external environment, our recommendation remains that of a very cautious tactical NOK approach despite the attractive strategic elements of a long position”.