Currency crosses in Scandis are cushioned with the impetus from their respective central banks single mindedly targeting growth in Norway and inflation in Sweden.

Growth will eliminate the output gap and core inflation should see 2% - the Riksbank's hyper-sensitivity to the exchange rate is not sustainable for a local economy that is cyclically stronger and structurally sounder than the Euro area. The policy shackles should finally start to loosen for SEK next year.

Scandinavian FX was blighted by assertive monetary policy again this year. Neither above-target inflation in Norway nor above-trend Swedish growth stayed the hand of the region's central banks which continued to regard their economic glasses as distinctly half-empty.

The Riksbank marginally out-performed the Norges Bank (35bp of rate cuts and 5% of GDP in QE versus 50bp from the Norges Bank's) yet NOK was the harder hit, falling another 13% versus USD, 3% versus SEK and 1.5% versus EUR.

The risk distribution is balanced. Riksbank's capacity to weaken SEK on an inflation undershoot is low compared to the scope for appreciation on an inflation overshoot, but there's still a greater risk of inflation undershooting than overshooting. FX intervention is a low probability event barring an early test of 9.00.

Structurally, as the high wage legacy of the oil boom complicates the longer-term task of rebalancing the economy away from its dependency on the energy sector.

Providing support to domestic growth though is Norway's fiscal rule and the translational effect of a weaker NOK on Norway's sovereign oil fund, GPFG, that act as an automatic stabilizer. We can observe from the diagram how this currency cross is directly proportional to the oil prices.

This FX translational effect would have increased the government's fiscal scope by NOK 30bn in 2014, i.e., about 1% of mainland GDP-sums which the government can use to prop up the economy.

As such, we are cautiously constructive on NOK and believe EUR/NOK can drift lower once oil prices are able to find a stable floor.

NOK has now lost 36% of its value vs USD since 2013. SEK has shed 25%.