EURNOK: Risk of further weakening in the short term – Nordea Markets

Joachim Bernhardsen, Research Analyst at Nordea Markets, notes that the EURNOK has climbed to above 9,60 and they see the risk of further weakening in the short term.

Key Quotes

“The correlation to the oil price has been on and off over the last couple of year, but through 2018 the two seems to have recoupled. And Brent at USD 65/bbl undoubtedly calls for more upside in the cross.”

“The drop in oil price coupled with outlook for a weaker housing market and what usually is a bad time of the year for the NOK could be a toxic mix. Although the Q4 seasonality in the NOK often is exaggerated, as both the weakness in 2014 and 2015 is explained by a drop in the oil price rather than seasonality, it is a fact that foreign accounts build down their NOK exposure towards the end of the year. Looking at the last five years, net NOK purchases tend to drop towards year-end and has always been negative in December.”