CFD Trading Rate Euro vs Norwegian Krone (EURNOK)

NOK has been off to a poor start this year and we expect this to continue in the months ahead. 

We regard relative rates to be a positive for EUR/NOK in 2024 and given our call for below-trend-growth globally and that markets should price in tighter global monetary conditions that rarely pose an environment in which EUR/NOK declines. 

In the near term, we will closely monitor developments in global manufacturing but in the absence of a sharp growth acceleration combined with further global disinflation we still think the balance of risk favours a higher EUR/NOK in the coming 3-12M. 

We think NOK is fundamentally undervalued but we do not see the trigger for a sustainable turnaround in the next 12M.

Norges Bank is highly unlikely to start cutting rates before the Fed and ECB. With small shifts in interest rates toward the summer, we see EUR/NOK rangebound in the 11.20-11.50 area. 

When rates abroad are lowered during the second half of 2024, we see NOK faring better and expect EUR/NOK to reach 11.00 by the end of 2024.

The policy rate was hiked to 4.50% in December – so it would seem far too soon for Norges Bank to embrace any idea of easing. However, the Norwegian Krone has been suffering a little this year as the backup in market interest rates has hit the risk environment. 

In all, we suspect EUR/NOK needs to trade a little longer in this 11.35-11.45 range.