MARKET TALK: Danske Closes Short EUR/NOK Trade

Danske closes short EUR/NOK trade ahead of the Norges Bank governor's annual address Thursday and recommends buying back the EUR/NOK 12-month forward at 7.6442 for a 2.87% profit. Danske believes the governor will try to intervene verbally in the FX market especially since EUR/NOK is now back where it was just after the SNB set a floor in EUR/CHF. The move then to 7.50 prompted a strong verbal response from Norges Bank and Danske thinks the governor could repeat his warning Thursday night, sparking some profit-taking. With positioning less stretched than it was in September, Danske says it would use any spike in EUR/NOK to position for a new move lower in the cross. EUR/NOK now at 7.5290.