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EUR/NOK could slip below 8.000 in 3m – Danske Bank

FXStreet (Edinburgh) - The prospect for a stronger NOK could push the Nordic cross to levels below 8.0000 the figure, suggested Jens Pedersen, Senior Analyst at Danske Bank.

Key Quotes

“In the Scandi FX sphere, the market will digest yesterday’s rally in the NOK following the unexpectedly hawkish stance from Norges Bank, which raised the short-term rate path and only lowered the long-term rate path marginally”.

“As such, Norges Bank stands out as one of the few hawkish central banks out there”.

“In our view, the market is too bearish on Norwegian growth on the back of the expected fall in oil investments and fundamentally we remain bullish on the NOK on relative growth expectations and carry”.

“In respect of positioning, we note that speculators turned significant sellers of NOK in the week ending 12 September”.

“Based on the past 15 weeks of weekly FX flow data from Norges Bank, positioning appears to be relatively light in NOK and thus positioning is not a barrier for NOK strength”.

“We forecast EUR/NOK at 8.10 in 1M, 7.95 in 3M, 7.85 in 6M and 7.75 in 12M”.

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