EUR/NOK seen lower in the next months – Danske Bank

Senior Analyst at Danske Bank Kristoffer Lomholt suggested the Norwegian Krone remains poised for further appreciation during the current year.

Key Quotes

“As expected, EUR/NOK rose to the upper end of the 8.90-9.10 trading range in the final month of 2016 on year-end seasonality. Yet, in the new year, we still expect the cross to move gradually lower on normalising growth and real rates, valuation and oil markets stabilising further”.

“In terms of the oil price-NOK relationship, we emphasise that we do not expect the oil price rise to continue at the same pace as seen since the OPEC agreement as non-OPEC procuders gradually increase production. As such, we still forecast the oil price to reach USD59/bbl at end-2017. Yet, we think even a stable oil price on balance should be a NOK positive given the other factors mentioned above”.

“We shift lower our EUR/NOK profile, forecasting the cross at 9.00 in 1M (from 9.10.), 8.90 in 3M (9.10), 8.80 in 6M (9.00) and 8.70 in 12M (8.80)”.