#EURSEK #EURNOK #USDSEK #USDNOK Medium / Long term Outlook and Positioning

Before examining each currency, one factor must be mentioned that is common for all of them.  For all of the respective economies  there is not a fundamental factor (political or economic) that would justify a high probability of a very big change (by long term standards) in the value of its currency  in either direction (appreciation or depreciation).

In brief, the main factors that will affect each individual currency in the medium to long term are:

#SEK

• Concerns about the housing market.  
• Riksbank is expected to announce the end of QE in the December meeting, and turn hawkish.  A change in its rate is expected early in 2018.

#NOK

• Concerns about the housing market
• Oil prices and #NOK value not necessarily correlated

• NB will probably leave rate unchanged until at least Q3 2018
• Spill over effects form possible issues in the Swedish housing market

#EUR

• The EU produces good and solid economic data.  There is no indication that there will be any dramatic change in that.
• After the #EUR and the Brexit crisis markets have renewed confidence in the EU.  They show resilience and confidence in EU politics.
• ECB is the slower in following the normalization path.  However this process has already started albeit in slow steps.

#USD

• FED will most probably turn hawkish this week.  A rate increase is quite probable to happen again once or twice next year.
• US data is good and there is nothing to suggest that this might change dramatically. 
• Business surveys show strong positive sentiment in the economy and the equity market is on the uptrend
• The Trump administration might not want a strong dollar - New FED chair is a relatively unknown factor (same applies for its relationship with the Trump administration) 

Most institutional research teams consider both #NOK and # SEK to be undervalued both against #EUR and  #USD.

Barclays: For #EURSEK a gradual from from current levels  to 9.30 by Q4 2108.  The same for #EURNOK with a value of 9.25.

CIBC:  A gradual drop to  a value of 9.0 for both by the end of Q4 2018.

UBS:  For #EURSEK a gradual drop from current levels  to 9.20 by Q4 2108.  The same for #EURNOK with a value of 9.10.

Societe Generale: They see #EURNOK at 9.1 for Q1 and Q2, 9.20 for Q3 and 9.15 for Q4.  For #USDNOK they see a gradual drop to 7.2 by the end of Q4 and the same for USDSEK to 7..17.

Danske Research: #EURNOK gradually to 9.10 by Q4.  #EURSEK Q1 10.1, and then gradually drop to 9.7 by Q4.  #USDNOK gradually to 7.28 by Q4.  #USDSEK 8.71 Q1 and then gradually drop to 7.76 by Q4. 

Handelsbanken: #EURNOK 9.20 Q1, #EURSEK 8.45 Q1, #USDNOK 8.14 Q1 #USDSEK 8.36 Q1

Below are H4, Daily and Weekly charts for #EURNOK and #EURSEK.

#EURNOK H4

#EURNOK Daily

#EURNOK Weekly

#EURSEK H4

#EURSEK Daily

#EURSEK Weekly

The uptrend on which both pairs are, is clear as expected.

For #USDNOK and #USDSEK, the charts are as follows:

#USDNOK H4

#USDNOK Daily

#USDNOK Weekly

#USDSEK H4

#USDSEK Daily

#USDSEK Weekly

No trend can be identified neither on #USDSEK nor on #USDNOK.  In both we are above the long term EMAs on the Daily and on the Weekly charts.

The economic fundamentals do not provide any strong bias for any of these pairs.

Most research teams are suggesting that there will be a trend reversal and hence long term positioning should be made accordingly.

So the question is:  Is "jumping of" the current trends and start positioning against them the best course to follow at the moment?

The answer to that is at the moment no.  To position against the trend requires extremely strong evidence that a trend reversal is imminent or at least a very big change in the rate is imminent for which there is sufficient evidence that might provide the momentum for a trend reversal.

There is nothing to suggest that. 

For #EURSEK and #EURNOK by taking account the fundamentals,  and at the same time by looking at the charts, it could be intuitively said that yes, a gradual reversal might happen leading  to 9.3 or even lower.  But it is not a certainty.  And even if it happened it would not be a sudden drop but rather a bearish range that could lead to this level.  

This type of movement can be traded both ways.

For #USDNOK and #USDSEK a drop to 7.2 would mean a very strong downtrend throughout the next 4 quarters.

The only factor that could justify that would be a very weak #USD across the board.  There is nothing to suggest at the moment that #USD will have such a path during the next quarters.

Medium and long term positioning for all pairs, remains long with caution, meaning relatively tight TP levels, and distance between orders relative to the volatility.  If volatility continues as it is the last months the distance could be relatively tight.  

Update 14 December 2017

#EURSEK Range q1 q3 2018

#EURNOK Range q1 q4 2018

#USDSEK Range q1 q4 2018

#USDNOK Range q1 q4 2018