NOK vulnerable to profit taking – Danske Bank

According to Valtteri Ahti, Chief Strategist at Danske Bank, in terms of the NOK we are facing a thin domestic data calendar in the coming weeks, which alongside technicals, the external environment and the latest Norges Bank re-pricing leaves NOK vulnerable to profit taking, in their view.

Key Quotes

“Our fundamental predisposition remains to re-sell EUR/NOK on rallies. On a separate note, we don’t want to overdo the market impact of the current political uncertainty in Norway. If a vote of confidence results in a change of government to a Labour/Socialist/Centre-government, one should keep in mind that any government will be reluctant to break the fiscal policy rule. Hence, the effect on rates/FX should be negligible. Also, the labour party has a long tradition for fiscal discipline, which should limit further the impact on NOK markets.”