2013 saw EMFX getting hit really hard due to DM markets recovering and investors shifting their focus from EM to DM. But then NOK and SEK too got hit hard and they don't even fall into the EM criteria. Yes yes the whole Commodity etc etc ..
Point here is if you believed Short EURNOK and EURSEK were the trades to proxy hedge the EU Sovereign Crisis then you might want to give it a bit of thoughts. Well the damage has been done a bit late. The purpose I have put this long term charts of EURNOK here is since the beginning of year I have been getting research reports from Scandinavian banks on how they feel that NOK has value and overall EURNOK is undervalued and has potential for downside.
Well I don't myself trade this pair but keep an eye on it because my tutor my old man 'BPP' a veteran FX Trader who started his career market making Deutsche Mark against local African currencies( Rwanda, Uganda,Kenya) takes quite a bit of interest in Scandies. I will get back to BPP and his trades some other day.
As a starter few prime trendlines have been taken out on monthlies. This trendlines date back 96' and have been pivotal. Also noticable on larger picture is EURNOK has double tested 02' lows and has been heading higher since then.
I believe there is a strong correlation between G3 yield curve steepening since May , Growth in EM especially S.Korea , Mexico etc . All this leading indicators point towards investors expectations of better and stable DM/EM economies. ( Pls note not all EM have been in better shape there is the nice ones which I like i.e KRW, MXN and the ones I dislike ZAR, TRY and INR)
Hence if one believed NOK and SEK has safe haven status then the time is ripe to bite the bullet and get over it.
EUR/NOK has potential to head higher towards 8.75/80 in the next 3-5 months. My directonal indicator is heading towards long term over bought range but still in comfortable zone. My long term stat arbs are still bullish and favour a long strategy.
8.06/16 is major pivotal support which should buying interest intact for medium term.
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