NOK could weaken in the longer run – Danske Bank

Analyst at Danske Bank Kristoffer Lomholt sees the Norwegian Krone losing some momentum in the next months.

Key Quotes

“With markets pricing a close-to-zero percent probability of a September rate cut, an ‘unchanged’ NB announcement next week is unlikely to spur substantial NOK strength. Also NB is likely to leave the door open for rate cuts, which is partly to maintain a weak NOK amid weak global growth and heightened uncertainty”.

“While the risk of a NB cut has fallen significantly, we still think NB is likely to announce liquidity measures at some point in H2 in order to fight the heightened Nibor policy rate spread driven by regulatory changes in the US. In such a scenario NOK rates would fall and the NOK weaken”.