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Senior Analyst at Danske Bank Jens Pedersen assessed the prospects for NOK in light of the Norges Bank meeting.

Key Quotes

“In Scandi FX all eyes today turn to the Norges Bank (NB) meeting and specifically the revised rate path as a rate hike is fully expected. For FX markets the two key questions are: (a) will NB explicitly mention December as the most likely time for the next rate hike and (b) how many hikes will NB signal for 2019″.

“Our expectations are on the hawkish side as we – unlike consensus – think December will become a ‘live’ meeting. If proven right, this would add support to our short EUR/NOK trading recommendation and we would expect EUR/NOK to test the key support levels in the low 9.40s”.

“If Norges Bank instead ‘signals’ March but at the same time lifts the rate path signalling three 2019 hikes, we would expect a more modest NOK appreciation”.

“A dovish scenario would be Norges Bank maintaining its rate path intact, thereby signalling only roughly two hikes per year in 2019 and 2020. All in all, however, we think the balance of risk is for a lower EUR/NOK in today’s session”.