NOK in rate-expectations turbulences

Volatility is almost everywhere at the moment but very rarely is it as pronounced as in EUR-NOK. 

First of all that is due to the low liquidity in the currency pair and secondly it is the result of the unpredictable behaviour of Norges Bank. It had signalled that it would cut rates again before June if the economy did not develop surprisingly positively. Now that the PMI for May slipped below the magical mark of 50 and industrial production in April also eased the FX market priced in a rate cut for next week's meeting, says Commerzbank. This certainty was shaken yesterday by the assessment of Monica Maeland, minister of trade and industry, who is of the view that the Norwegian economy had stayed strong. As a result EUR-NOK dropped by more than 10 big figures. 

"A strong result for today's inflation data is likely to shake the rate cut expectations even further. However, for the time being there is still some scope before the inflation target of 2.5% is reached. Therefore, a rate cut is expected next week", according to Commerzbank.