Norwegian Krone: Supported by energy and tight gas market – Danske Bank

Danske Bank analysts note that Norway's unemployment rate remained at 2.0% in October, reinforcing expectations for unchanged interest rates at Norges Bank's November meeting. The bank's decision to limit daily NOK sales to 300mn, despite projections suggesting larger sales, comes as elevated energy risk premiums and a tight European gas market continue to support the Norwegian Krone.

Tight labour and energy support NOK

"In Norway, the seasonally adjusted unemployment rate was unchanged at 2.0 % in October, in line with our expectation, and confirms that the labour market remains tight despite weaker growth."

"This is marginally lower than Norges Bank's forecast from the latest MPR in Sep (2.1%), but not enough to alter our expectations of unchanged rates at next week's meeting."

"Also in Norway, Norges Bank announced it will sell NOK 300mn/day in November. The revised oil-adjusted deficit for 2026 (down NOK 16.5bn) should in isolation have pushed daily sales to around NOK 850mn/day, but Norges Bank and the Ministry of Finance likely chose to smooth flows via the Petrobuffer Fund given they will need to buy NOK in 2027. A sensible approach that explains the more modest pace.

"The NOK has continued to strengthen, supported mainly by an elevated energy risk premium and a very tight European gas market."