In our pan-Nordic December survey among FX clients, we asked about the 3M forecasts (12 March) for EUR/SEK, EUR/NOK and EUR/USD. The bonus questions this time were (i) which of the two housing markets, the Swedish or the Norwegian, is the most fragile, (ii) whether the Riksbank would raise rates in 2018 and (iii) whether Norges Bank would raise rates in 2018.
EUR/SEK. There is a widespread consensus among clients that there is set to be a rebound for the SEK going into next year. The average forecast in 3M is 9.76. Among the Nordic countries, Norwegian clients are the most SEK bullish at 9.70, while Swedish clients see the cross at 9.77. Hence, there is no home bias in this sense. Only 14% of respondents expect the cross to go higher in 3M. There is no evidence that a weaker housing market (see below) will weigh further on the SEK.
EUR/NOK. The view that EUR/NOK will head sharply lower in three months is widely shared among our clients. Consensus is for a 2.77% drop in the cross, with the average forecast being 9.54. Meanwhile, a slim majority expect Norges Bank to raise rates next year, which is not priced nor signalled by the central bank. Finnish clients see EUR/NOK dropping 3.2%, whereas Norwegian clients are neither more nor less bullish than the rest. 12% expect that the NOK will be weaker than it is now.
EUR/USD. Clients have turned bullish on the US dollar again. That goes for all countries, with an average predicted decline of 1.27% and a consensus estimate at 1.1668. 15% expect EUR/USD to trade above 1.20 in three months, whereas an equally big share see the cross staying within the 1.17-1.20 range. The rest see a bigger USD rebound.
Housing market fragility? Clients are definitely more worried about the Swedish housing market than the Norwegian: 81% of clients see the Swedish housing market as the most fragile. Swedish clients are even more bearish, as 83% of respondents in Sweden think that their own housing market is more vulnerable. Danske Bank shares this relative concern and that is part of the reason why we are bullish on NOK/SEK.
Riksbank to hike in 2018? A 62% majority of Swedish clients see a hike from the Riksbank in 2018 vs a 46% minority of all clients. In the September survey, a 60% majority saw a hike before Q4 18 and 72% of Swedish respondents. Hence, clients have in general turned less hawkish, which could partly reflect that the housing market has popped up as a greater concern. Danske Bank sees no hike in 2018.
Norges Bank to hike in 2018? Expectations on Norges Bank are almost the mirror image of Riksbank expectations. Here, a 62% majority of Norwegian clients expect no hike from Norges Bank vs a 48% minority of all clients. Compared to the September survey, there is still a dovish tilt among Norwegian respondents, though the 'no hike camp' has shrunk from 70% back then. Danske Bank sees a hike in Q4 18.
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