EUR/NOK to edge lower towards 10.40 on a 12-month view - Danske Bank

FXStreet reports that economists at Danske Bank believe there will be tailwinds to the Norwegian krone from external factors, strong domestics and the possibility of Norges Bank starting to raise rates next year and expect a downward sloping path for EUR/NOK over the coming year projecting 10.40 in twelve months.

“Like those of its peers, the Norwegian recovery is experiencing a setback from new restrictions. That said, restrictions in Norway are far lighter than in most other European countries. We should expect activity and labour market data to level off in the coming months. With a stable to stronger NOK and lower capacity utilisation, we expect inflation to move towards the 2% target in the coming year.”

“In our base case, we expect continued support for NOK from the external environment and domestic economic outperformance and Norges Bank to lead the developed world’s hiking cycle. However, the topside seems capped by the oil price, limited potential for further USD weakness and relatively high-cost levels in Norway. In addition, in the very near-term seasonality fears may weigh. 

“We project EUR/NOK at 10.80 in 1M, 10.60 in 3M, 10.50 in 6M and 10.40 in 12M.”