NOK keeps the cautious note near term – Danske Bank

Jens Sorensen, Chief Analyst at Danske Bank, sees NOK within a cautious stance in the short term.

Key Quotes

“With the OPEC extension out of the way, NOK focus now turns to domestic developments and the global business cycle outlook”.

“On the domestic side, the latest releases continue to paint an upbeat picture of the Norwegian economy, but with low domestic wage/inflation pressure Norges Bank is unlikely to hike rates before end-2018”.

“At this stage we think Norges Bank is likely to lift the rate path but to maintain a positive rate cut probability. As interest rate markets do not seem to buy into the rate cut probability, we do not think this call is a strong NOK-supportive factor near term”.

“We expect a period of fading global growth momentum, which limits near-term upside potential for commodity prices. As a result, we keep a cautious tactical view on the NOK even if we - from a 6-12M perspective - see strategic value in gradually building up long NOK exposure”.