USD/NOK Outlook: Likely to decrease, as the rate is below its recent average and near recent lows due to multiple pressures on the US dollar.
Key drivers:
• Rate gap: The Federal Reserve has a bearish outlook with expected rate cuts, contrasting with Norges Bank's cautious but stable stance on the NOK.
• Risk/commodities: Oil prices are high and above their recent average, supporting the NOK as Norway is a significant oil exporter.
• One macro factor: Economic forecasts point to a positive outlook for the Norwegian economy, which supports a stronger NOK against the weakening USD.
Range: USD/NOK is likely to drift lower within the recent range as the market adjusts to current economic narratives.
What could change it:
• Upside risk: A sudden escalation in geopolitical tensions could lead to increased volatility in the US dollar.
• Downside risk: Continued weakening of US economic indicators could push the USD lower, further enhancing NOK strength.
