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Since the middle of June EUR/NOK has been trading mostly in a 10.70 to 10.90 range but economists at Rabobank expect the pair to lower towards the 10.50 level due to better than expected economic data releases and upward revisions from policymakers about the extent of the downturn. 

Key quotes

“In May retail sales unexpectedly bounced by 2.8% m/m and house prices increased. Perhaps most surprising of all, a recent Opinion poll suggests that consumer confidence is now higher than the pre-virus period.” 

“Norges Bank expects GDP to contract by -3.5% this year compared with an estimate of -5.2% in May. Additionally, the central bank is looking for an expansion in GDP next year of 3.7% compared with a previous forecast of 3.0%. In tune with these revisions, the Norges Bank has adjusted its guidance around the likely pace of interest rate hikes. Its latest set of forecast includes rates at 0.1% in 2022 and at 0.5% in 2023.  Relative to many other recent central bank statements this is a fairly hawkish view.”

“We see scope for EUR/NOK to edge back to 10.50 on a three-month view.”