Bank of America has recommended selling the Norwegian krone against the Swedish krona, citing widening growth and interest-rate differentials between the two economies.
The trade is structured with an entry at 1.0124, a target of 0.9812, and a stop-loss at 1.0267, implying a potential 3.1% depreciation in the NOK/SEK cross from the entry point. The recommendation follows evidence of accelerating growth in Sweden and cooling momentum in Norway, alongside shifting expectations for central-bank policy.
The Riksbank’s perceived bias toward tighter policy has strengthened the Swedish krona’s appeal, while the Norges Bank’s reduced likelihood of further hikes has weighed on the Norwegian currency. Bank of America noted that external macro conditions are also turning more supportive for the SEK.
Despite these shifts, the NOK/SEK pair remains near two-year highs, which the bank views as an opportune entry for the bearish trade. Risks to the position include a rebound in Norwegian inflation, weaker-than-expected Swedish data, or a renewed surge in oil prices, all of which could undermine the trade thesis.
