USD/NOK forecast as crude oil prices get turbocharged
- The USD/NOK price rose on Monday even as the price of crude oil rose.
- Data from Norway showed that consumer prices surged in September.
- The pair has formed a head and shoulders pattern on the 4-hour chart.
The USD/NOK price held steady on Monday even as the price of crude oil jumped and after the relatively positive Norwegian inflation data. The pair rose to a high of 8.5735, which was slightly above last Friday’s low of 8.5057.
Crude oil prices and Norway inflation
Norway’s consumer prices jumped in September as the country continued to reopen and as the price of energy jumped. According to the country’s statistics agency, the headline consumer price index jumped from 3.4% in August to 4.1% in September. This was a significant jump than what most analysts were expecting. The CPI rose from 0.9% to 1.0% on a month-on-month basis.
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The core CPI, which excludes the volatile food and energy products, rise from 1.0% in August to 1.2%. At the same time, the producer price index (PPI) jumped to 57.8% in September.
Still, the USD/NOK pair jumped after these numbers came out because most analysts were expecting inflation to rise. Also, the pair rose because the country’s central bank, known as Norges Bank has already hinted that it will keep rising interest rates. It made a 0.25% rate hike in its previous meeting.
The USD/NOK price also rose even as the price of crude oil jumped. The price of Brent jumped to a multi-year high of $84 while that of West Texas Intermediate (WTI) rose to more than $80 for the first time in years. This trend happened as investors continued to price in higher demand for oil even as supply remains sluggish.
Oil prices are important for the Norwegian krone because of the millions of barrels that the country pumps every day. Looking ahead, the next key catalyst for the pair will be the JOLTs job openings numbers and the upcoming US inflation numbers.
The four-hour chart shows that the USD/NOK pair has been in a major downward trend in the past few weeks. A closer look shows that the pair has formed a head and shoulders pattern whose neckline is slanting as shown in the green line. The pair is also below the short and longer-term moving averages.
Therefore, there is a likelihood that the pair will break out lower in the near term since the Norwegian economy has recovered quicker than the American one.
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