12 Jan 2015
Oil prices might impact the NOK heavily in coming weeks – Rabobank
FXStreet (Barcelona) - Jane Foley, Senior Currency Strategist at Rabobank, explains that oil prices might be the driving factor for NOK in the coming weeks, expecting further weakness in oil to drag USD/NOK higher.
Key Quotes
“The sharp weakening in the value of the NOK vs. both the EUR and the USD during the final months of last year will have provided some solace for the Norwegian economy. That said, although this will have cheapened Norwegian exports, there have been concerns for some time that this sector has been squeezed by the high wage costs of the more dominant oil and gas sector.”
“The softening of the NOK will also lend support to Norwegian CPI data. While the Eurozone, Sweden and Switzerland are all grappling with deflation Norwegian CPI printed a rise of 2.1% y/y in December – though it is still under the Norges Bank’s target of 2.5%.“
“In the weeks ahead the outlook for oil prices will have a strong bearing on the value of the NOK. While further weakness in oil could push USD/NOK higher, gains could be tempered by expectations regarding Fed policy.”
“Since we do not expect the Fed to hike rates until late in 2015, we see scope for some choppy trading in the USD crosses and this could reinforce resistance at the recent high of USD/NOK 7.87.”
“We see risk that EUR/NOK will trade in a choppy range around 9.15 in the coming months, with the 9.00 area offering strong support.”
Key Quotes
“The sharp weakening in the value of the NOK vs. both the EUR and the USD during the final months of last year will have provided some solace for the Norwegian economy. That said, although this will have cheapened Norwegian exports, there have been concerns for some time that this sector has been squeezed by the high wage costs of the more dominant oil and gas sector.”
“The softening of the NOK will also lend support to Norwegian CPI data. While the Eurozone, Sweden and Switzerland are all grappling with deflation Norwegian CPI printed a rise of 2.1% y/y in December – though it is still under the Norges Bank’s target of 2.5%.“
“In the weeks ahead the outlook for oil prices will have a strong bearing on the value of the NOK. While further weakness in oil could push USD/NOK higher, gains could be tempered by expectations regarding Fed policy.”
“Since we do not expect the Fed to hike rates until late in 2015, we see scope for some choppy trading in the USD crosses and this could reinforce resistance at the recent high of USD/NOK 7.87.”
“We see risk that EUR/NOK will trade in a choppy range around 9.15 in the coming months, with the 9.00 area offering strong support.”