FXStreet (Barcelona) – Michael Sneyd of BNP Paribas, maintains a long position on NOK/SEK, targeting 1.0950.
Key Quotes
“Despite the relative dataflow from Sweden and Norway, several of our metrics indicate that the decline of NOKSEK has been too extreme and the pair has scope to rebound. On 1 July ahead of the Riksbank meeting we entered a long NOKSEK trade recommendation at 1.0550, targeting 1.0950, with a stop-loss placed at 1.0390. The position has benefited from the Riksbank’s decision to cut its repo rate by 10 bps and purchase an additional SEK 45bn of government bonds.”
“Our BNP Paribas FX Positioning Analysis indicates that short NOK positioning is starting to appear crowded; while SEK positioning is close to neutral levels. Net positioning in the NOK is at a score of -24 which, while less than the maximum short of -50, represents close-to-the-largest net short this year. In contrast, net positioning in the SEK is close to neutral, at -6. This is close to its lightest positioning level in 2015. Combined, net positioning in NOKSEK is close to its lowest levels in the past few years, which suggests scope for a squeeze in relative NOKSEK positioning.”
“From a technical perspective, NOKSEK is trading close to a key support at 1.0400. This level has been the base for the pair several times throughout 2015. Not only does this suggest that the current price is an appealing area for entering long NOKSEK positions, but placing a stop-loss slightly below this level, at 1.0390, is also attractive.”
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