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SCANDIS: Danske Recommend Long NOKSEK, Targeting 0.9850

SCANDIS
CEEMEABulletSwedenNorwayGlobalForeign Exchange BulletsRegionMarkets

Danske write that a long NOK position may be the best way to position for “an improvement to global risk appetite and commodities”, with their models suggesting “the latest NOK weakness has been difficult to explain”.

  • They recommend a tactical long NOKSEK trade at 0.9600, with a soft target of 0.9850 and a hard stop-loss of 0.9450.
  • Although they see the Norges Bank remaining hawkish at Thursday’s meeting, they “want to downplay the importance of relative rates as the potential catalyst to turn around the performance of NOK”, instead viewing the krone as a “high-beta derivative of the global investment environment”.
  • A renewed sell-off in risk appetite represents the biggest risk to the trade. However, Danske note “the strong support levels in the cross around the 0.95 area” and that “the SEK-legs add some hedge to the global environment relative to the alternative short EUR/NOK or USD/NOK position”.
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Danske write that a long NOK position may be the best way to position for “an improvement to global risk appetite and commodities”, with their models suggesting “the latest NOK weakness has been difficult to explain”.

  • They recommend a tactical long NOKSEK trade at 0.9600, with a soft target of 0.9850 and a hard stop-loss of 0.9450.
  • Although they see the Norges Bank remaining hawkish at Thursday’s meeting, they “want to downplay the importance of relative rates as the potential catalyst to turn around the performance of NOK”, instead viewing the krone as a “high-beta derivative of the global investment environment”.
  • A renewed sell-off in risk appetite represents the biggest risk to the trade. However, Danske note “the strong support levels in the cross around the 0.95 area” and that “the SEK-legs add some hedge to the global environment relative to the alternative short EUR/NOK or USD/NOK position”.