NOK: An interesting liquidity year of 2019 – Nordea Markets
According to analysts at Nordea Markets, the upside in EUR/NOK is probably more or less exhausted by now, but there is one dark-horse left - namely the fixed rate F-loan auction next Monday the 31st of December.
“The announcement of the same F-loan year-end auction last year was a trigger for the weak NOK. This year the communication has been a little more elegant from Norges Bank, but the market may still fear what could be in store for the NOK given the experience from last year.”
“Ultimately it all boils down to two questions. 1) Will a lot of liquidity be taken in this F-loan auction over year-turn? No. (Only 250mn last year). Could it influence NOK negatively anyway? Yes.”
“We though decide to close our long EUR/NOK position, as we expect some choppy two-way trading ahead before New Year. HIA, SOMA and F-loan psychology though all suggest that NOK can weaken further before the calendar writes 2019.”
“2019 could be an interesting year for NOK given the liquidity forecast published by Norges Bank last week. Seasonality in the structural liquidity will be high – and a new record high structural liquidity may be on the cards next summer. If EUR/NOK follows the pattern from this year, we could have EUR/NOK in 9.50-9.60 by the end of March-2019, before it is headed above 10.20 over the summer.”