It looks as if the USD may be getting some support against the Norwegian Krone as the Norwegian government plans to begin withdrawing its stimulus. According to the Finance Minister, Sigbjoern Johnsen, “Norway must remove government stimulus or risk faster interest rate increases that would strengthen the Krone and stifle an export recovery”. As a country that is mainly an exporting country, a very strong exchange rate erodes the exporters’ profits and hinders recovery and economic growth.
Norway’s economy is growing quite well and the government continues to stimulate the economy which supports the Krone further; the reason for it being that investors expect the central bank to continue raising interest rates. This expectation has helped the Krone to be the best performer of the 16 most tracked currencies since the end of June. The Krone gained 7.8% against the EUR and 15% against the USD in that period.
The trend receives support from technical analysis as well as can be seen below
• The chart below is the 2-hour USD/NOK chart by ForexYard.
• The technical indicators used are the Slow Stochastic, Relative Strength Index (RSI), and Williams Percent Range.
• There is a fresh bullish cross on the Slow Stochastic which suggests that a bullish movement is building.
• The Relative Strength Index (RSI) signals that the price of this pair currently floats in the over-sold territory, indicating upward pressure.
• The Williams Percent Range is testing the lower border at the -100 mark, which merely highlights some added upward pressure.
USD/NOK 2-Hour Chart
source: forexyard.com
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