USD/NOK Outlook:
The USD/NOK pair is slightly weaker, but likely to move sideways as it trades below its recent average and is near recent lows. The US dollar has been impacted by concerns about potential declines in durable goods orders.
Key drivers:
• Rate gap: The Federal Reserve's cautious approach to future interest rate hikes is contrasting with Norges Bank's stable monetary policy, supporting the NOK.
• Risk/commodities: Oil prices are currently stronger than their average, supporting the NOK, as Norway is a major oil exporter and a rise in oil prices typically boosts the currency.
• One macro factor: Recent data indicates a contraction in durable goods orders in December could weigh on the US dollar, adding uncertainty to its outlook.
Range:
The USD/NOK is expected to hold within its recent range, reflecting mixed signals from both currencies.
What could change it:
• Upside risk: A significant recovery in US consumer spending could strengthen the dollar.
• Downside risk: A sharp decline in oil prices could weigh on the NOK, leading to further USD appreciation.
