OPEC Meeting On The Horizon
When OPEC meets on Nov 30 it is widely expected to extend its current adherence to oil output cuts beyond the current end-March 2018 expiry date. Russia, which has also signed up to the OPEC output cuts, may be prepared to go along with an extension. Russia’s TASS news agency reported on Tuesday that Russian oil producers and energy ministry officials had last week discussed the possibility of accepting a six-month extension to the output curb programme. The currencies of oil producing nations might be expected to benefit from such an outcome, a number of currencies might spring to the minds of traders. The Canadian dollar (USDCAD) might ordinarily be regarded as a beneficiary of a higher oil price but with NAFTA negotiations ongoing traders might not necessarily be drawn to it as a first port of call in current circumstances. But what of the Norwegian krone?
The recent slide in the value of the Swedish krona (EURSEK,USDSEK) seemed to spill over into EURNOK with the upward spike in the EURNOK price flushing out a lot of NOK longs. Positioning in that cross is arguably a lot less crowded now after the recent volatility. With that in mind, might traders think EURNOK is the optimal way to play an OPEC output curb extension? Only time will tell.
Written by Neal Kimberley, External Currency Analyst.