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NOK seen pressured if Norges Bank signals shift and oil falls

Commerzbank expects EUR/NOK could rise above 11 by year end if inflation data weakens and lower oil weighs on the Norwegian krone.

Reported · Written up by our desk · Major Pairs

Commerzbank’s Antje Praefcke said Norges Bank kept its policy rate at 4.25% while maintaining that more tightening could be needed because inflation is still above target.

The bank highlighted that upcoming data, particularly August inflation due on September 10, could influence whether Norges Bank drops its year-end hike signal, especially if fundamentals also soften.

Commerzbank warned that market pricing could shift toward calling off any further rate hike if the data trends weaker, which would likely put downward pressure on the NOK.

It also tied downside risk for the currency to oil, saying weaker fundamentals and lower oil prices could push EUR/NOK above 11 by year end.

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