NOK flows: NOK little changed after CPI

Norway CPI is on the soft side of expectations, with the core measure falling to 3.0% y/y against a consensus of 3.2%, even though the headline was in line at 2.5%. EUR/NOK had edged up ahead of the data but is back at the levels seen at Thursday’s close near 11.72. We continue to see upside potential for the NOK, even though the slightly softer data marginally increases the chances of a rate cut at the June meeting. Rate cuts should not be damaging for the  NOK as yield spreads remain substantially in its favour and the currency remains good value, especially against the SEK.