Market news

21 June 2021

USD/NOK: A hawkish FED gives summertime sadness for the Norwegian krone - Nordea

FXStreet notes that the Norwegian krone has weakened markedly against both the euro and the US dollar as hawkish Fed surprised markets, shattering reflation trades such as being long NOK. NOK is likely in store for summertime sadness, but economists at Nordea remain optimistic on behalf of NOK towards year-end.

“Over the summer, the risk is for a somewhat weaker NOK – especially against the USD – if US figures come in better than expected and inflation surprises yet again on the upside. Key to watch will be Nonfarm Payrolls and inflation prints. If these surprise positively, markets will start betting that the Fed will become even more hawkish. This will likely be good news for US rates and USD, but bad news for stock markets and thereby NOK.”

“Yet, we remain positive on NOK towards year-end. We expect NOK to start performing again when NIBOR rises as we come nearer to Norges Bank’s September hike. The reason behind the lower NIBOR is much better structural liquidity in the NOK market, but this will change after the summer. Lower liquidity should push NIBOR higher towards year-end. Moreover, Norges Bank’s September hike will push NIBOR even higher, thereby supporting NOK. This means that the current headwind for NOK from a lower NIBOR will turn to tailwinds in a couple of months’ time.”

“Higher rates in Norway is why we hold our view that EUR/NOK will come down below 10 by year-end. But the same cannot be said for USD/NOK, we still believe USD/NOK will trade relatively sideways towards year-end.”

Market Focus

Material posted here is solely for information purposes and reliance on this may lead to losses. Past performances are not a reliable indicator of future results. Please read our full disclaimer.

Open Demo Account
I understand and accept the Privacy Policy and agree that my name and contact details can be used by TeleTrade to contact me about the information I have selected.
23 International Awards
Have a question?

We are ready to assist you in every step of your trading experience
by providing 24/5 multilingual customer support.

Follow us

Risk Warning: Trading Forex and CFDs on margin carries a high level of risk and may not be suitable for all investors. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72.72% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Prior to trading, you should take into consideration your level of experience and financial situation. TeleTrade strives to provide you with all the necessary information and protective measures, but, if the risks seem still unclear to you, please seek independent advice.

© 2011-2022 Teletrade-DJ International Consulting Ltd

Teletrade-DJ International Consulting Ltd is registered as a Cyprus Investment Firm (CIF) under registration number HE272810 and is licensed by the Cyprus Securities and Exchange Commission (CySEC) under license number 158/11.

The company operates in accordance with the Markets in Financial Instruments Directive (MiFID).

The content on this website is for information purposes only. All the services and information provided have been obtained from sources deemed to be reliable. Teletrade-DJ International Consulting Ltd ("TeleTrade") and/or any third-party information providers provide the services and information without warranty of any kind. By using this information and services you agree that under no circumstances shall TeleTrade have any liability to any person or entity for any loss or damage in whole or part caused by reliance on such information and services.

TeleTrade cooperates exclusively with regulated financial institutions for the safekeeping of clients' funds. Please see the entire list of banks and payment service providers entrusted with the handling of clients' funds.

Please read our full Terms of Use.

To maximise our visitors' browsing experience, TeleTrade uses cookies in our web services. By continuing to browse this site you agree to our use of cookies.

Teletrade-DJ International Consulting Ltd currently provides its services on a cross-border basis, within EEA states (except Belgium) under the MiFID passporting regime, and in selected 3rd countries. TeleTrade does not provide its services to residents or nationals of the USA.

Material posted here is solely for information purposes and reliance on this may lead to losses. Past performances are not a reliable indicator of future results. Please read our full disclaimer.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72.72% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Choose your language/location