VIEW: Thursday saw ING note "a positive knee....>

NOK: VIEW: Thursday saw ING note "a positive knee jerk reaction of NOK to the

Norges Bank meeting as the central bank upgraded its growth outlook. Expect the

negative output gap to close earlier and the interest rate outlook was revised

higher from flat throughout the forecast horizon to a first full hike by 1Q23.

While modestly positive for NOK, this on its own should now have a long-lasting

effect on currency as the rate hike prospects still remain very remote. Rather,

the prime NOK driver should remain the general risk environment which is to keep

the still heavily undervalued NOK on the appreciation path as the global

U-shaped recovery unfolds. Indeed, based on our BEER model, NOK is the cheapest

G10 currency on a medium-term basis. The gradual upward trend in the oil price

(our commodities team targets 50 US$/bbl in 4Q20) should also contribute to the

NOK recovery. In addition, while other central banks pursue QE, Norway's central

bank doesn't and instead engages in NOK purchases. This also underlines a

relative NOK attractiveness, particularly vs SEK where Riksbank engages in QE.

We expect EUR/NOK to test NOK10.00 later this year and look for NOK/SEK to push

through parity."