EUR/NOK: Krone gains may pause but resume next week – ING
|Norway's krone extended early-week gains yesterday, with EUR/NOK breaking below the 10.10 level and now trading around 10.06. In the view of economists at ING, NOK gains could pause today, but resume next week.
Markets may have started to position for a hawkish tone by the Norges Bank
“The improvement in Omicron-related sentiment is indeed the main driver of the krone’s exceptional performance. Another spike in natural gas prices – caused by a Norwegian plant outage – also pushed NOK higher.”
“We are seeing a recovery in the market’s expectations around Norges Bank tightening in 2022. Markets may have started to position for a hawkish tone by the Norges Bank as it announces monetary policy (and most likely hike rates) next week.”
“We may see some pullback after yesterday’s big move, but there is likely some more room for NOK to appreciate into the NB meeting next week.”
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