Jakob Christensen, Chief Analyst at Danske Bank, argued that markets remain NOK short for the time being.
“EUR/NOK remains supported despite oil moving lower yesterday, and according to our models, the usual short-term fundamental drivers cannot fully explain the move higher”.
“Besides the dividends season in Norway, which might explain part of the NOK depreciation, recent EUR/NOK support could also come down to Fortum (Finland), which according to a stock exchange announcement, has been active in FX markets ahead of yesterday’s breaking release that the Municipality of Oslo buys out Fortum from Hafslund. A trade worth NOK 6.68bn, according to the announcement”.
“The weekly flow data from Norges Bank reveals a sizable net NOK selling of NOK 8.8bn from foreign banks (proxy for speculative flows) last week. This adds to an accumulative net selling of NOK 70bn since the EUR/NOK bottom in late February. Our measure of speculative NOK positioning would now suggest a FX market, which is net short NOK”.