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Economists at Danske Bank think the Norges Bank will want to join the ‘whatever it takes’ camp by cutting rates further. EUR/NOK is sitting at 11.410.

Key quotes

“We now expect NB to cut rates by another 50bp to 0.50%.The timing of this cut is very difficult to predict, but we cannot rule it out as soon as in the coming sessions.” 

“We think the cut will come before the June meeting. In our base case this will mark the rate bottom but we cannot rule out one additional 25bp cut in June.”

“For FX markets it is all about global risk sentiment and the oil price. As such, should NB cut rates in the coming sessions it’s not a given that the NOK should weaken, as oil price changes heavily dominate relative rates as an FX driver currently.”

“The best way to illustrate that was Friday morning’s price action where the 50bp surprise cut from NB coincided with an almost 30 figure move lower in EUR/NOK as risk-on dominated cross-asset market moves at the time.”