Analyzing the Latest Norwegian Economic Data and Central Bank Actions: Implications for the Norwegian Krone

In the ever-changing landscape of the global economy, staying informed about the latest developments in individual countries is crucial for understanding the factors driving currency movements. In this article, we turn our attention to the Norwegian economy and delve into the implications of the recent data releases and central bank actions, as we engage in a conversation with Michael Stark, an expert from Exness.

The recent data from Norway has shown remarkable strength, providing insights into the actions taken by the Norges Bank, the country's central bank. The Norges Bank surprised the markets by opting for a double interest rate hike last month, deviating from the expected single hike. This decision is rooted in the robust economic indicators witnessed in the country.

The June job report, for instance, revealed an unemployment rate of 1.7%, slightly below the consensus and approaching the pre-recession lows of early 2008. Such positive labor market conditions bode well for the overall economic health of Norway.

 

Michael Stark, Exness:

Overall, recent data from Norway have been quite strong, which is part of the reason the Norges Bank called for a double hike last month instead of a single as expected. June’s job report showed 1.7% unemployment, slightly lower than the consensus and very close to the pre-recession low in early 2008.

 

Industrial production in Norway has been dropping consistently for some months now, but this isn’t necessarily a major factor for the Norwegian krone which usually trades cyclically and has some correlation to crude oil. Inflation doesn’t display a clear downtrend yet, actually rising to 6.7% in May for the annual non-core figure, so the Norges Bank might continue to hike while major central banks are mostly at least slowing down.

 

Finding a good opportunity to trade USDNOK or EURNOK in high summer would usually be a very challenging exercise. These pairs already have among the lowest volume for minors on average, and combined with seasonality the likelihood of false signals is greater. Over the last several years, USDNOK has generally retraced or corrected against the main trend during summer, so given the fundamental situation it might be possible to see that happen again and the price test support around 10.20 kr, but that depends on 10 July’s Norwegian inflation and the Fed’s meeting on 26 July.