NOK flows: NOK firmer after Norges Bank meeting

EUR/NOK has dropped around 0.5% after the Norges Bank monetary policy report. Norges Bank left rates unchanged as expected, but revised up short term rate projections, even though they actually projected rates to be slightly lower on the 3 year horizon. This is not a major surprise, as there have been some more hawkish comments in the intervening period, but EUR/NOK has been overdue a move lower, even though the recent trend in yield spreads has favoured the EUR. We still look for EUR/NOK to continue to edge lower towards 11, but the main scope for gains is against the SEK, where we see a move back above parity.