Allan von Mehren, Chief Analyst at Danske Bank, expects the Norwegian Krone to appreciate towards the 9.00 mark vs. the single currency within a year’s view.
“The Norwegian GDP release yesterday confirmed our upbeat view on the domestic economy. With decent details, positive revisions and Q1 mainland growth very clo e to 0.7%, spare capacity is clearly an argument for a higher rate path”.
“While this indeed could be one of the triggers for a NOK turnaround via Norges Bank (NB) removing its rate cut probability entirely at the upcoming meeting in June, we think NB would prefer more clarity on the inflation/wage outlook before modifying its dovish ‘on hold’ stance”.
“Hence, global factors – including not least the oil price – will in our view continue to dominate domestics as the most important near-term NOK driver. We forecast EUR/NOK at 9.30 in 1M, 9.30 in 3M, 9.10 in 6M and 9.00 in 12M”.