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21 May 2015
Norges Bank could cut rates in June – Danske Bank
FXStreet (Edinburgh) - Christin Tuxen, Senior Analyst at Danske Bank, sees the Nordic central bank lowering its refi rate in June by 25 bp.
Key Quotes
“Yesterday’s release of Norwegian mainland GDP surprised slightly to the upside”.
“However, disregarding the contribution from inventories the release was actually very much in line with both market expectations and Norges Bank’s projections”.
“Indeed, the market reaction was limited with EUR/NOK now trading close to pre-release levels”.
“The pricing of Norges Bank is also close to unchanged and in our view still underestimates the risk of a rate cut next month”.
“We regard the oil price risk to be more symmetrically balanced in the near term and do not expect the oil price to be a one-way supportive factor for the Norwegian currency as it was in April”.
“With the market pricing a probability of less than 50% of governor Olsen cutting rates by 25bp on18 June, we still expect EUR/NOK to drift higher towards 8.55 in the coming month on more Norges Bank easing being priced in”.
Key Quotes
“Yesterday’s release of Norwegian mainland GDP surprised slightly to the upside”.
“However, disregarding the contribution from inventories the release was actually very much in line with both market expectations and Norges Bank’s projections”.
“Indeed, the market reaction was limited with EUR/NOK now trading close to pre-release levels”.
“The pricing of Norges Bank is also close to unchanged and in our view still underestimates the risk of a rate cut next month”.
“We regard the oil price risk to be more symmetrically balanced in the near term and do not expect the oil price to be a one-way supportive factor for the Norwegian currency as it was in April”.
“With the market pricing a probability of less than 50% of governor Olsen cutting rates by 25bp on18 June, we still expect EUR/NOK to drift higher towards 8.55 in the coming month on more Norges Bank easing being priced in”.