NOK hurt by lower Brent – Danske Bank

Sverre Holbek, Senior Analyst at Danske Bank, assessed the recent price action of NOK and the barrel of Brent crude.

Key Quotes

“In the Scandies, the big story yesterday was the sharp move higher in EUR/NOK following the collapse in the price on Brent crude down to USD52/bbl”.

“In our view, commodity markets in general this week have priced in the impact of a more hawkish Federal Reserve next week, which has weighed on prices”.

“The oil market has been particularly hard hit on the back of stretched long positioning and some possible complacency towards the downside risks following a period of very low volatility”.

“In turn, the drop in oil prices has more than mitigated the positive effect on NOK from a strong domestic economic situation. The oil market and thus NOK are likely to stay nervous ahead of next week’s FOMC meeting”.