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The Norges Bank unexpectedly cut rates today to zero, its first time reaching that level, limiting the upside impulse in EUR/NOK, economists at TD Securities brief.

Key quotes

“The Norges Bank unexpectedly cut its policy rate by 25bps to 0.00% today. This is a new record low.”

“The Norges Bank’s forecasts see GDP contracting by -1.9% q/q in Q1 and -7.4% q/q in Q2, before rebounding by 2.9% and 1.4% in Q3 and Q3, respectively.” 

“For now, our base case is that the 11.05 level (+/-) should serve as a fairly durable floor, at least for now.” 

“We could see the cross gravitate to the 11.28/30 zone in EUR/NOK. Above that, a further squeeze could target a return to 11.45, but the market does not appear to be in a hurry.”