Stance on NOK remains cautious – Danske Bank

Chief Analyst at Danske Bank Jens Sorensen keeps the cautious view on the Norwegian Krone.

Key Quotes

“In ‘red’ markets a heavy oil price and a somewhat stronger EUR have returned EUR/NOK to the mid 9.40s”.

“Indeed, the global environment is the reason we still prefer a cautious tactical NOK stance irrespective of improving domestic releases”.

“Today’s data releases out of Norway consist of April credit growth and Norges Bank announcing daily NOK purchases for June. Norges Bank is highly focused on the level of household indebtedness. However, it would require a significant surprise for the credit release to spark any market movements”.

“On the June NOK purchases, the revised fiscal budget (released earlier this month) showed a smaller use of oil money than originally pencilled in. In isolation, that suggests a somewhat lower need for Norges Bank to exchange FX for NOK in order to cover the non-oil budget deficit. Meanwhile, that is known by markets and a possible downward revision of NOK purchases to say 800M/day should have but a brief announcement effect”.