GILTS: Bull Steepening Intact, Off Highs

NOKSEK remains at an interesting technical juncture. Strong support at the April 9 low of 0.9065 contained downside earlier this month, after Norges Bank’s December MPR rate path was more hawkish than expected. However, the trend condition in the cross remains bearish, with rallies short of the 20-day EMA at 0.9197 considered corrective. 

• We wrote earlier this month that the 0.90-0.91 area has historically been an important long-term support zone in NOKSEK. See here
• For our full review of the December Norges Bank meeting, see here

Figure 1: NOKSEK Since 2022 (Source: Bloomberg Finance L.P)

Tomorrow sees Norges Bank’s January FX transactions released. The central bank is expected to step up NOK purchases in 2026, a combination of lower petroleum revenues and continued government transfers to limit bank reserve growth. Given thin holiday season liquidity, the announcement could spur some temporary volatility in NOK crosses. 

• The psychological impact of an increased central bank FX market footprint may provide background support to the krone next year. However, it’s important to remember that petroleum revenue-related FX transactions are generally interpreted as a residual flow, since lower aggregate petroleum revenues are considered to be net NOK-negative all else equal.
• See a selection of sell side views on Norges Bank FX transactions below:
  • SEB: “The budget proposal for 2026 implies less petroleum revenues, and a larger need to exchange FX to NOK to fund the non-oil budget deficit. According to the budget, NOK purchases will amount to minimum NOK 650mn/d on average, with risks skewed to the upside. Note that new information on petroleum taxes will become available in late January, affecting purchases from Feb. In addition, Norges Bank is buying NOK 126mn/day to fund the transfer of dividends to the government”
  • DNB: “For 2026, we forecast that the government will need to purchase cNOK190bn to cover the gap between NOK revenues from petroleum activities and the amount required to finance the budget deficit. This corresponds to FX sales of cNOK800m/d in 2026. In addition, Norges Bank sold FX equivalent to NOK126m/d since March to fund dividend transfers to the government”…. “Overall, we expect Norges Bank to sell FX equivalent to approximately NOK930m/d in January”
  • Nordea: “From 2 January 2026, we expect Norges Bank to buy a total of NOK 950 million per day. “

Sources close to Chinese policymakers anticipate a major policy announcement.- On MNI Policy MainWire now, for more details please contact sales@marketnews.com