- EUR/NOK drops to multi-week lows near 9.6600.
- The Norges Bank hiked rates by 25 bp to 1.25%.
- The central bank hinted at further tightening in the next months.
The Norwegian Krone is appreciating sharply vs. its European peer in the second half of the week and is dragging EUR/NOK to the area of 2-month lows in the 9.6600 neighbourhood.
EUR/NOK lower post-NB
NOK has intensified its buying interest today after the Norwegian central bank – the Norges Bank – raised the policy rate by 25 bps to 1.25%, matching the broad consensus among investors.
Following today’s hike, the Norges Bank said that further tightening remains on the table, confirming the view that the Scandinavian central bank continues to decouple from the rest of its developed peers, which remain immersed well into the dovish territory.
The Norges Bank justified its decision on rates on the solid health of the Nordic economy, high capacity utilization and inflation running a tad above the bank’s target.
What to look for around NOK
The mood around the risk complex, Brent-dynamics, a healthy economy and a hawkish central bank continue to be the main drivers for the Norwegian currency for the time being. Recent results from the Regional Network Survey showed fundamentals in the Nordic economy remain pretty solid, reinforcing the case of further tightening by the Norges Bank in the upcoming months as well as a stronger Krone.
EUR/NOK significant levels
As of writing the cross is losing 0.94% at 9.6775 and a breach of 9.6633 (low Jun.20) would expose 9.6221 (78.6% Fibo of the April-May rally) and finally 9.5896 (monthly low Mar.21). On the upside, the next hurdle comes in at 9.8318 (monthly high Jun.11) followed by 9.8761 (monthly high May 10) and then 9.8803 (monthly high Mar.8).