NOK: Norges Bank to keep hawkish stance – Nomura

Analysts at Nomura expect Norges Bank to maintain its hawkish stance next week and as the first hike approaches (September in Nomura’s view), they expect further NOK appreciation pressures.

Key Quotes

“NOK/SEK longs remain cleanest macro expression

In a fragile risk environment, we continue to believe NOK longs are best expressed against SEK rather than EUR. EUR/NOK correlations to oil prices and the rates differential have fallen to neutral, meaning risk appetite has been the primary driver of the cross.

With global central banks turning more hawkish while inflation rises and growth faces headwinds, we retain a cautious stance on risk appetite for now.

EUR can especially perform well against commodity currencies if it delivers hawkish surprises in the near future. Thus, EUR/NOK may struggle to move lower even if NOK rates are moving higher.”