FXStreet (Edinburgh) - Sverre Holbek, Senior Analyst at Danske Bank, believes the cross has still room for further upside. Key Quotes “Norges Bank’s FX transactions released yesterday showed that foreign banks (proxy for speculative flows) last week net bought the Norwegian currency worth NOK4.7bn, which from a historical perspective is considerable”. “From an overall perspective, however, speculative NOK positioning remains stretched short and consequently we expect short covering to eventually constitute a NOK positive when the business cycle turns in 2016 and Norges Bank can signal no more need for rate cuts”. “According to our microstructure model on FX flows, the NOK is 4% cheaper than what a historical/statistical relationship suggests, thereby highlighting the rise in the NOK liquidity risk premium over the past year”. “Noteworthy, the liquidity premium seems to have diminished in recent weeks but we expect it to widen again in December when liquidity historically tends to worsen. Going forward we still see EUR/NOK risks as skewed to the upside”. For more information, read our latest forex news.