Goldman Sachs: Go Long NOK/SEK With A Target Of 1.01

Goldman Sachs have also issued a new recommendation to go long NOK vs SEK as "global trends reinforce divergence among the Nordic economies. Strong global growth later this year should support oil as demand picks up while supply remains constrained, benefiting NOK (and the currencies of other oil exporters). In contrast, Sweden, which is more sensitive to developments in manufactured goods trade, may benefit less from the next stage of recovery. Additionally, expectations for policy tightening are likely to drift higher in Norway before they do in Sweden (though we don't expect changes to either bank's policy rate anytime soon). Norway began the crisis in a stronger place, adjusted policy quickly, and has had a shallower economic downturn than Sweden. Thus, we would need to see a much stronger recovery in Sweden before expecting tighter policy. Furthermore, Norges bank recently raised their projected policy while the Riksbank increased the size of its asset purchase program. For these reasons, we propose going long NOK vs SEK, with a target of SEK1.01 and a stop of SEK0.94. The main risk to this trade is a delay to the vaccine timeline, which would weigh significantly on global growth."