ACROFX
Short

Comeback for EURNOK?

FX:EURNOK   Euro Fx/Norwegian Krone
36 0 1
The NOK             has depreciated rapidly in the past week on the back of weaker data and falling
oil             prices. The market is now pricing in a roughly 50/50 chance of Norges Bank cutting
its policy rate at the December meeting. All things are possible, but this seems over the
top.

The NOK             is much weaker than Norges Bank assumed in September and banks have
cut their mortgage rates. On the other hand, global interest rates have fallen and growth
has been slightly weaker than expected. On balance, though, Norges Bank would need to
revise down its growth projections for mainland GDP next year from 2.25% in September
towards 1% for current market expectations to be justified and we think that is really
pushing it.

With inflation close to target, house prices rising and unemployment largely
unchanged, it also seems unlikely that Norges Bank will be proactive and cut interest
rates in anticipation. The slide in the NOK             therefore seems to be an overreaction.

Trading Idea:
Short on bounces up against 8.48-8.55 with a target price of 8,15. Stop loss if we close above 8.55 on weekly timeframe .

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