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EUR/NOK - We’ll be just like Norway!

EUR, NOK, We, Just, Like, Norway, Fundamental Analysis, fx trader, forex

“Oh, if we leave the EU” they all said “we’ll be fine. After all, Norway’s not in the EU and it’s fine. We’ll be just like Norway!”

Well enough about Utpoias (Utopiae?). What’s more interesting is a recent move in the EUR/NOK pair that’s taken it out above a falling trend line and its 200-day moving average. The coming few days will serve to confirm this as either a breakout or a fakeout, with three prior attempts to better the 200-day moving average having failed.

The Euro has had a positive couple of days following an update from the ECB in which Mario Draghi basically said nothing – no news being neither good news nor bad news – but the Norwegian Krone is due some downside with the Norges Bank intent on easing monetary policy due to a tepid economic growth outlook. Since late 2014, Norwegian rates have come down by 100bp. The central bank last cut rates in March this year and delivered an outlook that suggested another in H2 – which is what we’ve just entered.

Eurozone policy simply cannot get any easier – the ECB has already adopted negative interest rates. The Norges Bank has yet to do so and has said that it’s ready to consider it. The NOK is not seen as a safe haven currency – even if it may indeed provide some shelter from global tumult (this is Norway after all) and thus many may see it as a calmer, more predictable reactor to domestic macroeconomic drivers. 

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