Daily outlook for EUR/NOK: Danske Bank

Quotes from Danske Bank:

-In the Scandi FX markets, the releases from Norway in particular, and to some extent those from Sweden, will be directional for the Scandi currencies today. Our forecast for the Norwegian data today is in general more upbeat relative to consensus suggesting some (temporary) support for the NOK.

-However, we still expect Norges Bank to cut interest rates by 25bp in March and given that the market only prices around a 50/50 probability of this, we still see the risk as tilted to the upside for EUR/NOK ahead of the Norges Bank meeting on 19 March.

-Furthermore, recent flow data from Norges Bank show that foreign banks (proxy for speculative flows) have been net NOK buyers of roughly NOK17bn since mid January. This suggests that the NOK sensitivity to the downside currently is high should today's data disappoint.