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Morgan Stanley went short USD/NOK at the NY.....>

NOK: Morgan Stanley went short USD/NOK at the NY close on Thursday, with a stop
at NOK8.22 & a target of NOK7.50.
- MS note that "the Norges Bank's hawkish bias continues, with the bank guiding
markets toward a rate hike as soon as September. The previous decision to add
financial stability to its mandate & the reduction in the inflation target from
2.5% to 2.0% should keep the hawkish trend in place, particularly as house
prices appear to have reached a cyclical trough. Oil prices are likely to remain
supported as there is limited spare capacity in the global oil mkt, which should
support Norway's terms of trade & hence NOK valuation. Norway's current a/c
surplus & foreign asset position is also likely to keep NOK relatively supported
in an environment of declining global liquidity. Norwegian data remain robust, &
broad money supply growth has rebounded to the highest within G10, suggesting
continued tailwinds to growth. We choose to position against the USD as our USD
scorecard is pointing decisively toward USD weakness starting in mid-August,
suggesting more caution may be warranted on USD longs now. The key risk to the
trade is that the Norges Bank turns more dovish, causing NOK weakness."
MNI London Bureau | +44 0203-865-3809 |
MNI London Bureau | +44 0203-865-3809 |

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