We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Bearish
GBP/USD
Mixed
USD/JPY
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Bullish
Oil - US Crude
Bearish
Bitcoin
Bearish
More View more
Real Time News
  • RT @globaltimesnews: A total of 1,052 cases of #coronavirus have been reported as of Jan 25 in #Hubei Province, with 129 in critical condit…
  • RT @FactSet: $SPX is reporting revenue growth of 2.9% for Q4, led by the Health Care (11%), Utilities (9%), and Communication Services (9%)…
  • The AUD has been hit by the risk-appetite pullback occasioned by the spread of Wuhan-strain coronavirus. This week may see domestic focus return, if headlines allow, with key inflation data due. Get your $AUDUSD market update from @DavidCottleFX here: https://t.co/UIpwno0pSq https://t.co/kib4d1mA0q
  • RT @anilvohra69: USD inverted (red) is correlated to Excess Reserves (blue) and Reserve Balances (green). 1/2 https://t.co/bbO1pPWY4F
  • RT @FactSet: $SPX is reporting a decline in earnings of -1.9% for Q4, led by the Energy (-42%), Consumer Discretionary (-14%), and Material…
  • Becoming a forex trader means living and breathing the excitement, risk and reward of trading in the biggest and most liquid market in the world. Do you have what it takes? Read here to discover the qualities and processes it takes to build consistency: https://t.co/EfWEACQ6Cz https://t.co/6iMyDFqnqe
  • Knowing how to accurately value a #stock enables traders to identify and take advantage of opportunities in the stock market. Find out the difference between a stock's market and intrinsic value, and the importance of the two here: https://t.co/QszmdZFxlk https://t.co/2mjzvYvgSn
  • Previewing the Texas Rangers new home! https://t.co/WITZGSQPlc
  • Thanks for having me on @MartinSEssex https://t.co/fg8uOe16wr
  • The MACD is often used with its default setting when entering trades. However, this versatile indicator can be customized to assist traders in exiting trades too. Learn how to better incorporate the MACD into your trading strategy here: https://t.co/HnY7gzsI2q https://t.co/5F1DSvAXyy
US Dollar May Rise vs NOK if Norges Bank Trims Hawkish Outlook

US Dollar May Rise vs NOK if Norges Bank Trims Hawkish Outlook

2019-08-15 05:00:00
Dimitri Zabelin, Junior Currency Analyst
Share:

US DOLLAR, NORWEGIAN KRONE, NORGES BANK – TALKING POINTS

  • Norges Bank rate decision, commentary may sink Norwegian Krone
  • Monetary authorities may pivot away from previous hawkish stance
  • US Dollar may extend gains vs Krone if Nordic markets get spooked

See our free guide to learn how to use economic news in your trading strategy!

The Norwegian Krone may be in for a painful session ahead if the Norges Bank cools rate hike expectations for the rest of the year. Up until recently, it was one of the most hawkish central banks in the developed world. However, slower global growth and weakening demand out of Europe may be eroding confidence that the Norwegian economy can withstand an environment of tightened credit conditions.

Specter of Slowing Growth is Haunting Europe

Chart Showing Eurozone Manufacturing PMI

As Norway’s largest trading partner – and destination for over eighty percent of the country’s exports – European demand is critical to the wealth of the Norwegian economy. Policymakers in Oslo are growing hot under the collar as a German ZEW survey data reached alarming-low levels and preliminary reports showed Europe’s largest economy likely contracted in the second quarter.

Norway’s petroleum-based economy is inherently at the mercy of changes in global sentiment due to its strong link to crude oil prices that are fickle by nature. The Norwegian Krone and benchmark OBX equity index frequently move in tandem with Brent, which might explain why the central bank is reconsidering its tightening cycle. Weaker crude oil prices are a downside risk for inflation and may warrant a change in policy.

ICE Brent Crude Oil, Norway OBX Benchmark Equity Index

Chart Showing crude oil prices, OBX

OBX chart created using TradingView

Looking at market implied policy rates on August 14 versus the historical reading in July shows a downward shift across all the various tenors. This suggests investors are anticipating significant trouble ahead to such a degree that it will warrant a reversal of the Norges Bank’s tightening cycle. It appears that the central bank is now finally succumbing to the pressure of its peers, and NOK will likely suffer as a result.

Gloomy Premonitions Ahead

Chart Showing Norges Bank Implied Policy Rates

FX TRADING RESOURCES

--- Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com

To contact Dimitri, use the comments section below or @ZabelinDimitrion Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.