Key Moments
- The Norwegian Krone has advanced 4.2% against USD and 2.9% against EUR in April, with gains accelerating recently.
- ING had previously highlighted 10.80-10.85 as a potential near-term EUR/NOK range but now sees growing downside risks to that target.
- Norges Bank is expected by ING to raise rates by 25 bp on 7 May, with markets currently pricing in 19 bp and potential for additional tightening later this year.
Krone Performance in April
ING strategist Francesco Pesole reports that the Norwegian Krone (NOK) has delivered a strong performance in April against both the US Dollar (USD) and the Euro (EUR). The currency has benefited from resilient US equity markets and rising oil prices, conditions that have been favorable for NOK.
According to Pesole, the recent environment in global markets has supported an acceleration in NOK gains, particularly in the most recent trading session.
| Currency Pair | April Performance of NOK |
|---|---|
| NOK vs USD | 4.2% rally |
| NOK vs EUR | 2.9% rally |
Reassessment of EUR/NOK Targets
ING had previously identified a EUR/NOK range of 10.80-10.85 as a likely level for this month. However, Pesole now points to increased downside risk to that range, noting that the strength and persistence of risk sentiment were initially underestimated.
The combination of firm risk appetite and supportive oil dynamics has shifted ING’s assessment, with the balance of risks now tilted toward a stronger NOK versus the Euro than previously anticipated.
Norges Bank Policy Expectations
The outlook for Norwegian monetary policy is a key factor behind ING’s revised stance. Pesole notes that:
“The Norwegian krone has staged an impressive 4.2% rally vs USD and 2.9% vs EUR in April, with gains accelerating yesterday. The market conditions we saw yesterday were ideal for NOK outperformance. US equities’ resilience kept global risk sentiment afloat as oil prices increased.”
“We have recently identified 10.80-10.85 as a landing zone for EUR/NOK this month, but had probably underestimated risk sentiment resilience, and risks are definitely on the downside relative to those targets.”
“That’s especially true considering that we expect Norges Bank to hike by 25bp on 7 May, which is currently 19bp priced in. While our current forecast is that this will be a one-and-done move, the risks are for a follow-up hike later this year, and we doubt Norges Bank will close the door to more tightening in May.”
With a 25 bp increase expected at the upcoming Norges Bank meeting and markets currently reflecting 19 bp of that move, ING sees potential for policy guidance to remain open to further tightening later in the year, adding another supportive element for NOK.
TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover 
