UBS sees CHF/NOK as top carry trade By Investing.com

US Dollar Norwegian Krone0.00%Swiss Franc Norwegian Krone-0.01%

Investing.com - The 4 yuan investment futures ap pNorwegian krone strengthened Thursday after UBS identified the CHF/NOK currency pair as "the most attractive carry pair" on a total return basis, according to a new research note from the Swiss bank.

UBS forecasts USD/NOK trading "in the 9s for the rest of the year," significantly weaker than current levels, primarily due to "negative USD factors." This outlook suggests potential appreciation for the Norwegian currency against the U.S. dollar in coming months.

The krone’s strength follows Norges Bank’s August policy meeting, where Norway’s central bank held interest rates unchanged at 4.25%. While the bank indicated more cuts may come later this year, it emphasized that "uncertainty surrounding the outlook is unusually high."

The decision to maintain rates was widely anticipated after higher-than-expected inflation data was published earlier in the week. This policy stance means the Norwegian krone "remains the highest yielder within the G10 besides the USD for the time being," according to UBS.

UBS expressed a positive view on the krone based on both structural factors and what it called "the NOK’s attractive carry proposition in the shorter run," suggesting continued investor interest in the currency for yield-seeking strategies.

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