- The USD/NOK declined slightly ahead of Norway's inflation data.
- Analysts expect the headline CPI rose to 1.7% in August while core CPI rose to 3.5%.
- The pair will also react to US jobless claims data.
The USD/NOK pair is down for the second consecutive day as the market waits for Norwegian inflation and US initial jobless claims data. It is trading at 9.0145, which is a few pips below the yesterday’s high of 9.1862.
The Norwegian krone has been among the best-performing currencies in the past few months. The USD/NOK pair dropped from a year-to-date high of 12.1127 in March to a low of 8.6628 on 1st September. Higher crude oil prices and an overall weak US dollar helped to support this downward trend.
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This month, however, things have changed and the Norwegian krone is in the defensive. The currency has weakened to 9.12862 against the dollar. That has happened because crude oil price has fallen from last month’s high of $45 to less than $40 while the dollar index has been rising.
In addition to this, the krone strengthened because of the overall strength of the Norwegian economy and a relatively hawkish Norges bank. The country has confirmed more than 11,000 cases and less than 250 deaths.
As a result, the impact on the economy was lower than in most countries. Recent data showed that the overall Norwegian economy contracted by 5.1% in the second quarter. The mainland economy, which excludes the volatile oil sector, contracted by 6.3%. This contraction was better than the Swedish and European Union decline of 8.3% and 15%, respectively.
Other economic numbers from Norway have been positive. For example, the country’s unemployment rate has fallen from 4.90% to 4.30% while manufacturing PMI has jumped from 42.8 to 46.1.
Meanwhile, the Norges bank has turned hawkish. In its most-recent rates decision, the bank left rates unchanged but guided to hikes in the next few years.
Looking ahead, the USD/NOK will today react to Norway’s inflation and US jobless claims data. Analysts polled by Reuters expect that Norway’s headline consumer prices rose to 1.7% in August from the previous 1.3%. However, they see the CPI falling to 0.4% in August. Meanwhile, they expect the core CPI, which excludes the volatile food and energy products remaining at 3.5%.
In the afternoon session, the Bureau of Labour Statistics will release the jobless claims data. Analysts expect the data to show that more than 846k people applied for jobless claims in the previous week. This will be lower than the 881k that filed for the claims a week before. It will also be the lowest number since March this year. The US will also release the producer price index data later today.
The daily chart shows that the USD/NOK pair has been in a steep downward trend in the past few months. However, it has bounced back slightly in September. As a result, it has moved above the descending trendline that provided resistance when the pair was falling. The price is slightly below the 50-day exponential moving averages.
Also, the Relative Strength Index (RSI) has moved from the oversold level of 30 to the current level of 52. Therefore, the pair is likely to continue falling as bears attempt to retest the YTD low of 8.6628.