USD/NOK: Norwegian inflation hints to possible Norges rate hike
- The Norwegian economy is making a faster recovery than other countries.
- Data showed that Norway’s inflation rose at a faster rate than expected.
- This means that the Norges Bank could hike rates faster than expected.
The USD/NOK is in a tight range after the relatively strong Norwegian inflation data. It is trading at 8.4830, which is slightly below yesterday’s high of 8.5120.
Norway inflation rises
Copy link to sectionNorway has emerged from the pandemic better than its peer countries. This trend is mostly because of the fact that the infection rate in the country was considerably lower than in other countries. Also, the country has a rich balance sheet, helped by the %1 trillion sovereign wealth fund. As such, the government used some of these funds to cushion the economy.
The economy is also recovering because of higher crude oil prices. The price of Brent has jumped by 40% this year, helped by demand and supply issues. Global demand is rising while OPEC and its allies have paused further supply increases.
Norway’s consumer prices continued their recovery in February. According to the statistics bureau, the headline consumer price index rose by 0.7% in February after rising by 1.1% in the previous month. This increase was better than the median estimate of 0.6%. It led to an annualised increase of 3.3%, higher than the estimated 3.0%.
This performance was mostly due to a 7% increase in furnishings and household equipment and a 6% increase in clothing and footwear.
Meanwhile, the core consumer price index, which excludes volatile food and energy products, increased by 0.4% and an annualised rate of 2.7%.
Further, the USD/NOK price reacted to the strong producer price index (PPI). The PPI increased by 9.7% in February mostly because of the price of crude oil and electricity.
Therefore, with the Norwegian unemployment rate falling, these numbers mean that the Norges Bank will hike interest rates earlier than expected.
USD/NOK forecast
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The USD/NOK price has been relatively volatile in the past few days. This is partly because of the rising US bond yields. On the four-hour chart, the pair is forming a descending triangle pattern. It has also moved below the 25-period and 15-period exponential moving averages (EMA). The two lines of the moving average convergence and divergence (MACD) have crossed the neutral level. Most importantly, it has formed a descending triangle pattern, which is a sign that the pair could break-out lower. You can trade the Norwegian krone using some of these PayPal forex brokers.
