UBS Switzerland AG reiterated its stance that the Norwegian krone remains the most attractive carry option among G10 currencies, underpinned by a still-hawkish Norges Bank and Norway's role as a net exporter of energy.
The bank maintained its EURNOK quarter-end forecasts at 10.70, 10.60, 10.50 and 10.50 for the next four quarter-ends through September 2027. Those projections reflect UBS's view on the relative path of the euro against the krone over the coming year-plus.
Norges Bank raised its policy rate by 25 basis points at its September meeting, taking the policy rate to 4.50%. The central bank signalled that further tightening could still be needed, a posture UBS cites as central to the krone's carry appeal.
UBS strategists Clémence Dumoncel and Constantin Bolz emphasised that elevated energy prices provide an additional tailwind for the Norwegian economy and currency. They attributed the higher energy price environment to ongoing geopolitical tensions in the Middle East and to rising seasonal demand as the Northern Hemisphere moves into winter, both of which reinforce Norway's position as a net energy exporter.
On rate expectations, UBS anticipates that Norges Bank and the European Central Bank will each deliver one further rate hike. The bank expects that outcome to preserve the prevailing rate differential between the two currencies, an important element for carry trades.
From a technical perspective, UBS identified support for the EURNOK around 10.73, while noting key resistance at approximately 11.30. The currency pair was trading near 10.8 on Tuesday.
UBS also outlined the principal risks that could undermine its view. The bank pointed to a sharp retreat in energy prices, a deterioration in global risk sentiment, or a materially more hawkish Federal Reserve that would strengthen the dollar as factors capable of reversing the krone's advantage.
The bank's commentary blends monetary-policy expectations, technical thresholds and commodity-driven fundamentals to make the case for the krone's continued carry attractiveness while setting out scenarios that could erode that case.