Nordea Look For Light Recovery In NOK in ‘24

Nordea write “lately, ‘good news’ (lower rates and higher stocks abroad) has not helped the NOK while ‘bad news’ (lower oil prices) seems to have pushed the NOK lower. We have seen this asymmetry before and our impression is that the NOK is just a sideshow without any clear interest.”

• “Part of the explanation could be seasonal effects. The NOK has historically had a weak Q4. It could be that financial participants don’t want to hold NOK risk over the new year due to capital constraints.”
• “NOK is oversold against the EUR according to the 14-day Relative Strength Index, which the momentum crowd follows.”
• “Friday’s Norwegian CPI data will be key for the NOK and Norges Bank.”
• “it is highly likely that EUR/NOK will move above 12.00 this week, before operating in a sideways manner toward year-end.”
• “If Norges Bank hikes in December, EUR/NOK is unlikely to fall below 11.50 in the short-term.”
• “For next year, higher energy prices due to China picking up steam, a cut in NOK sales from Norges Bank from 1.4bn NOK/day to around 700mn/day and lower interest rates abroad should help the NOK.”
• “This is why we see EURNOK at 11.50 next summer and at 11.00 by the end of 2024. A hard landing in the big economies, renewed inflation pressures abroad, and/or new geopolitical challenges are the main risks to our view.”