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10 Dec 2014
NOK depreciation to prevent rate cuts – TDS
FXStreet (Barcelona) - Jacqui Douglas, Senior Global Strategist at TD Securities, notes that there is no impetus for a rate cut by Norges Ban as depreciating NOK will help cushion the blow from lower oil prices.
Key Quotes
“We’re in line with general consensus for the Norges Bank to remain on hold at Thursday’s meeting, but for some probability of easing to reappear in the policy rate forecasts through H1 2015.”
“Markets have moved much further than the economist/ strategist community in looking for about 10bps of cuts this week, and close to 50bps over the next 6 months.”
“It just doesn’t look like the impetus is there for delivering a rate cut, especially given how much the depreciation in NOK will help to cushion the blow from lower oil prices. The unexpected depreciation of NOK should add about 60-80bps to the policy rate profile one year ahead, which will go a long way in balancing the drop in oil prices and lower growth forecasts.”
“With no rate cut this week, and no clear hints of cuts to come at the next policy meeting in March, we think that markets will have to pare back on some of the easing that they have priced in. We like reflecting this through selling CADNOK.“
Key Quotes
“We’re in line with general consensus for the Norges Bank to remain on hold at Thursday’s meeting, but for some probability of easing to reappear in the policy rate forecasts through H1 2015.”
“Markets have moved much further than the economist/ strategist community in looking for about 10bps of cuts this week, and close to 50bps over the next 6 months.”
“It just doesn’t look like the impetus is there for delivering a rate cut, especially given how much the depreciation in NOK will help to cushion the blow from lower oil prices. The unexpected depreciation of NOK should add about 60-80bps to the policy rate profile one year ahead, which will go a long way in balancing the drop in oil prices and lower growth forecasts.”
“With no rate cut this week, and no clear hints of cuts to come at the next policy meeting in March, we think that markets will have to pare back on some of the easing that they have priced in. We like reflecting this through selling CADNOK.“