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10 Feb 2016
EUR/NOK remains a ‘buy on dips’ – Danske Bank
FXStreet (Edinburgh) - According to Jens Pedersen, Senior Analyst at Danske Bank, occasional dips in the cross could represent a buying opportunity.
Key Quotes
“The EUR’s status as a preferred funding currency has driven EUR-buying in the beginning of the year despite increased speculation of more ECB easing”.
“As a result of the close connection between the oil price and global risk sentiment (via global growth worries) the NOK is very vulnerable in the current environment”.
“According to our models roughly two-thirds of this week’s spike in EUR/NOK has been driven by oil/risk sentiment and the last one-third by relative rates”.
“While the move seems slightly overdone in relation to the move in fundamentals, we would be very careful trying to go against the move - especially as we continue to see a high risk of a Norges Bank rate cut in March, which is not fully priced. As a result our view on EUR/NOK remains that of ‘buy-on-dips’.
Key Quotes
“The EUR’s status as a preferred funding currency has driven EUR-buying in the beginning of the year despite increased speculation of more ECB easing”.
“As a result of the close connection between the oil price and global risk sentiment (via global growth worries) the NOK is very vulnerable in the current environment”.
“According to our models roughly two-thirds of this week’s spike in EUR/NOK has been driven by oil/risk sentiment and the last one-third by relative rates”.
“While the move seems slightly overdone in relation to the move in fundamentals, we would be very careful trying to go against the move - especially as we continue to see a high risk of a Norges Bank rate cut in March, which is not fully priced. As a result our view on EUR/NOK remains that of ‘buy-on-dips’.