FX Sales Remain Steady in March as Norwegian Production Slows

Talking Points:

• FX transactions in March will remain at NOK 700 million per day
• Manufacturing PMI declines to 51.2 in February
• USDNOK moves towards resistance at 7.8650

Due mainly to suppressed energy prices, revenues from the State’s Direct Financial Interest have once again exceeded the amount transferred to the Global Pension Fund Global (‘the Fund’) on behalf of the state. This imbalance has allowed the petroleum buffer to become larger than necessary, leaving Norges Bank to sell the excess currency on the foreign exchange market. In accordance, Norway’s central bank will sell FX equivalent to NOK 700 million per day through the month of March. This remains consistent with the level in February and NOK 200 million/day less than the level in January.

While daily foreign exchange transactions have remained steady, Norway’s Manufacturing PMI has wavered; the index fell from 51.9 in January to 51.2 in February. Though still expansionary, 4 out of the index’s 5 subcomponents experienced a decrease. The production index fell from 54.4 to 52.2 while the employment index contracted at a faster rate from 47.2 to 46.5. The delivery time and stock components dropped to 50.6 and 45.9 respectively. As the exception, new orders ascended to 55.5 from 54.1.

Daily USD/NOK Chart

Chart Created by Walker England Using MarketScope2.0