I'm long on NOK-SEK at 0.9780 with a target at 0.9980 and a stop at 0.9680.

The NOK-SEK pair has been going down lately, breaking away from its usual strong points. I think this won't last because the foreign exchange support for SEK is decreasing, and interest rates are becoming more important.

Basically, NOK-SEK is going down because of two main reasons. 

Norway's positive rate over Sweden is getting bigger because their central banks have different approaches. The Norges Bank is being more aggressive, while the Riksbank is taking it easy (check Chart 1). Even though oil prices are going up, NOK-SEK is still dropping. Before, the SEK was doing well because the Riksbank was selling foreign exchange.

But they stopped doing that, and the Norges Bank is using less of their current account surplus. This should make the traditional factors for NOK-SEK more important, and the undervalued NOK might go up against the SEK. Also, keep an eye on interest rates because they could become a big deal soon as we approach the cutting cycle. The Riksbank hinted at a possible cut in H1, maybe even before the ECB.

I've opened a long NOK-SEK trade at 0.9780 with a target at 0.9980 and a stop at 0.9680

Mar 04 2024

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