Time to go long NOK? – Danske Bank
Senior Analyst at Danske Bank Jens Pedersen noted the positive prospects for the Norwegian Krone in the next months.
“In the Scandies, Friday delivered very comforting data in Norway. First off, the manufacturing PMI surprised on the upside and with strong details it clearly reduced the downside risk factors related to the manufacturing sector that appeared in September and October”.
“Secondly, and even more importantly, the NAV labour market report was much stronger than we and markets had expected. Not only does it confirm that Norwegian growth continues to operate above trend potential, but it also gives us confidence in our call of a roughly unchanged forward looking output score in tomorrow’s important Regional Network Survey”.
“On balance, these releases are clearly supportive for our call that the NOK will strengthen next year; hence, this leaves housing market uncertainty (release due Tuesday) and market liquidity the biggest near-term headwinds for the NOK. From a risk-reward perspective, however, we have reached levels where we now increasingly think it makes sense to buy the NOK”.