USD/NOK Outlook:
The USD/NOK exchange rate is currently below its recent average and near its recent lows. This downward movement is primarily due to stronger signals from the Norwegian economy.
Key drivers:
• Rate gap: The Federal Reserve is cautious with interest rate adjustments, while the Norges Bank has removed cut expectations, benefiting the NOK.
• Risk/commodities: Recent oil prices are significantly above their average, supporting NOK as Norway is a major oil exporter.
• One macro factor: A sharp rise in the Norwegian Consumer Price Index has strengthened the NOK, leading to decreased expectations of rate cuts in 2026.
Range:
Expect the USD/NOK to drift within its recent range as it remains under pressure.
What could change it:
• Upside risk: A surprise improvement in US job data could bolster USD.
• Downside risk: A drop in oil prices could negatively impact NOK, leading to further USD strength.
