EUR/NOK has continued to move higher since the beginning of November. Economists at Danske Bank continue to expect EUR/NOK to move higher going into 2022.

NOK vulnerable to negative news

“In our base case, we are moving into a period that will be characterised by weaker growth, tighter economic policy, tighter liquidity conditions, a stronger USD and shakier risk appetite. In that environment, NOK rarely performs and we emphasise the fading tailwind to NOK from NB’s NOK purchases.”

“We lift our forecast profile to 10.20 in 1M (from 10.10) but otherwise leave our profile unchanged. Forecast: 10.30 (3M), 10.40 (6M), 10.40 (12M).”

“The biggest risks to our forecasts lies in the global investment environment. If we return to an environment in which both global growth and inflation accelerate, we would expect a stronger NOK. Conversely, a sharp setback to risk leaves topside risk to our EUR/NOK forecast.”