#EURNOK @ 10.45994 : Short-term drivers favour further krone weakness – MUFG
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The krone has been one of the worst performing G10 currencies in September resulting in EUR/NOK hitting a fresh year to date high of 10.682. In the view of economists at MUFG Bank, risks are titled to downside for the Norwegian currency.
“The renewed sell-off for the krone has coincided with the ongoing hawkish repricing of central bank rate hike expectations. It has triggered a further sell-off in global equity markets that have hit fresh year to date lows as fears over a hard landing for the global economy have intensified.The NOK has been one of the most sensitive G10 currencies this year to the performance of global equity markets.”
“The krone has been undermined as well by the correction lower in the price of oil which has almost reversed all of the gains from the 1H of this year. The developments leave the krone vulnerable to further weakness in the near-term.”
“The Norges Bank’s decision to deliver another 50 bps hike at their latest policy meeting provides only limited support for the krone in current market conditions.”
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