Yesterday, our short CHF/NOK position was stopped out at 6.29 with a total loss of 1.78%.
We utilise the recent EUR gain and take an early profit of 0.51% on our sold 3M 1.2400/1.2000 EUR/CHF put spread.
Norwegian krone under pressure
In our quarterly FX publication, we recommended selling the CHF/NOK spot at 6.17 to position for an improvement in Norwegian data and a decline in global tail risks. This should lead to a continuation of flows out of CHF into triple-As, which still offer some carry. While Norwegian numbers have actually improved, the krone been under pressure due to:
1) softer rhetoric from Norges Bank,
2) a drop in commodity prices (not least in oil),
3) increased fears that we could see a significant currency outflow when the NST 470 government bond matures on 15 May
4) general euro strength that has also pushed other EUR/xxx crosses higher.
Hence, both EUR/NOK and CHF/NOK have traded markedly higher over the past couple of weeks. Yesterday CHF/NOK reached the stop loss level at 6.29. While we still expect NOK to perform in the medium to longer term, we acknowledge that near-term risks in both EUR/NOK and CHF/NOK are skewed to the upside. In our opinion, it is too early to position for NOK outperformance, even though Norwegian numbers seem to be improving at the moment.
To Read the Entire Report Please Click on the pdf File Below.
We utilise the recent EUR gain and take an early profit of 0.51% on our sold 3M 1.2400/1.2000 EUR/CHF put spread.
Norwegian krone under pressure
In our quarterly FX publication, we recommended selling the CHF/NOK spot at 6.17 to position for an improvement in Norwegian data and a decline in global tail risks. This should lead to a continuation of flows out of CHF into triple-As, which still offer some carry. While Norwegian numbers have actually improved, the krone been under pressure due to:
1) softer rhetoric from Norges Bank,
2) a drop in commodity prices (not least in oil),
3) increased fears that we could see a significant currency outflow when the NST 470 government bond matures on 15 May
4) general euro strength that has also pushed other EUR/xxx crosses higher.
Hence, both EUR/NOK and CHF/NOK have traded markedly higher over the past couple of weeks. Yesterday CHF/NOK reached the stop loss level at 6.29. While we still expect NOK to perform in the medium to longer term, we acknowledge that near-term risks in both EUR/NOK and CHF/NOK are skewed to the upside. In our opinion, it is too early to position for NOK outperformance, even though Norwegian numbers seem to be improving at the moment.
To Read the Entire Report Please Click on the pdf File Below.