The Norwegian Krone looks interesting with oil prices high and the Norwegian domestic economy doing well. Andy Lees of UBS writes:
Whilst I like the Norwegian currency, benefitting from its oil and gas, its oil fund and the fact that 98.8% of its electricity comes from non fossil fuels, if we are playing QE then geared countries should benefit more. The attached chart of the EUR/NOK looks to me like we could have a breakout, and I’m sure like me, there is a lot of money in the NOK because of the safety it has offered etc, and therefore could be a bit of rotation if this starts to go underwater.
It is interesting that people are talking about quantitative easing in the US when looking at a EUR/NOK cross. What does that tell you about QE and speculation in currencies? Are currencies going to be the main driver of investment returns over the next few years as John Paulson recently said? I think the key words in all of this are ‘speculation’ and ‘investment.’