Oil prices remain a key NOK driver - Nomura

Analysts at Nomura noted that since June 2016, Norges Bank rate hike expectations have made a significant turnaround, from pricing in cuts to now pricing in over 50bp of hikes for the next two years. 

Key Quotes:

"Norwegian economic fundamentals are strong, but we think the market’s pricing is now looking stretched and should be opposed. 

Meanwhile, the Swedish economy has a positive output gap, and core inflation is much higher. 

Oil prices remain a key NOK driver, but we argue the outlook is turning more negative. 

We recommend short NOK/SEK positions at current levels."