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Bank of America (BofA) analysts maintained a bullish outlook on the Norwegian krone (NOK) for the remainder of the year, predicting a stronger performance against the Euro (EUR) and the U.S. dollar (USD). This follows the recent meeting of Norges Bank, which aligned with market and BofA expectations, revealing no significant news impacting the currency.
BofA anticipates two interest rate cuts by Norges Bank in the current year. The analysts have maintained their assumption for these cuts to occur in September and December, times when the Committee is expected to have greater confidence in the medium-term inflation outlook.
However, they also suggest that the June meeting could be a potential time for a rate adjustment if inflation data softens more rapidly in the second quarter of 2025.
Despite the prospect of interest rate cuts, BofA remains optimistic about the NOK’s performance against the EUR and USD.
By the end of the year, they forecast the EUR-NOK exchange rate to reach 11.00 and the USD-NOK to hit 9.57. Nevertheless, for the first half of the year, BofA recommends selling NOK against the Swedish krona (SEK) during rallies.
The NOK has been the second-best performer among the G10 currencies this year. The BofA’s outlook suggests continued confidence in the currency’s strength, backed by their analysis of forthcoming monetary policy decisions and inflation trends.
The focus on the NOK versus the SEK in the first half of the year hints at a strategic approach to trading within the Scandinavian currency space.
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