Over the last week, things have gone from bad to worse for the Norwegian krone. However, economists at Nordea believe that we are near the top in both EUR/NOK and USD/NOK – NOK should strengthen when risk-sentiment improves and oil prices rise again.
Omicron will steer markets
“We believe the risk for the oil price is to the upside over the short-term as the cold weather should give oil demand an extra boost during the winter months. Higher oil prices will be good news for NOK.”
“There are signs that Omicron is milder compared to Delta strain and early indications suggest that vaccines are still effective against severe disease. If this is proven to be the case over the next few weeks, sentiment in financial markets should improve. Conversely, if Omicron is proven to be worse and/or vaccines to be ineffective, things could worsen a bit more.”
“Norges Bank’s rate meeting next week could impact the NOK. Some pundits have even gone so far as to question the December hike. We don’t share their view. As things look now, we believe Norges Bank will hike in December and publish a similar rate path as the one from September.”
