Norges Bank pumps the brakes on interest rate hikes
Norway’s Norges Bank left rates unchanged at 2.75% during its January meeting, as expected. However, Governor Wolden noted that the policy rate will most likely be raised in March.
Inflation slowed in December to 5.9% YoY from 6.5% YoY in November. This was after peaking 2 months earlier at 7.5% YoY. However, the Core PCE upticked to 5.9% YoY from 5.8% YoY a month earlier. PPI fell dramatically in December to 18.7% YoY after peaking earlier in 2022 near 80% YoY! The committee felt like a pause was needed as “the future policy rate path will depend on economic developments”. In December, the central bank said that the terminal rate would be around 3% this year. Markets are pricing in 3.25%.
USD/NOK has been moving aggressively higher from March 31st, 2022 to September 28th, 2022 when price peaked at 11.0116. Since then, price has been moving lower in an orderly channel but was halted at support near 9.7876 in December. The support included the 200 Day Moving Average, the bottom trendline of the channel and an upward sloping trendline from the lows of early June 2022. As is often the case, when price fails to break below one side of a channel it moves to test the other side. On January 3rd, price broke above the channel near 9.9987. However, three days later, price made a high of 10.3106 and reversed. USD/NOK is now consolidating around the 50 Day Moving Average, the 200 Day Moving Average, the top trendline of the channel, the long term upward sloping trendline from June 2022, and the 50% retracement from the March 31st lows to the September 28th highs, near 9.8900.
Source: Tradingview, Stone X
Trade USD/NOK now: Login or Open a new account!
• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore
Notice that as USD/NOK moved from the March 31st, 2022 lows to today, price formed a head and shoulders formation, with the most recent breakout above the channel forming the right shoulder. Price is currently sitting on a host of support, including the neckline of the pattern, near 9.7875. If USD/NOK breaks the trendline, price could be on its way towards the head and shoulders target near 8.3817. However, it must first pass through additional support at the 61.8% Fibonacci retracement of the above-mentioned timeframe at 9.4987, then the bottom trendline of the channel near 9.1500/9.2000. If price breaks below there, it can run to the March 31st, 2022 lows at 8.5635. If the support does hold and price moves higher, the first resistance is at the highs of February 6th at 10.3106. Above there is horizonal resistance at 10.4238 and then several levels of previous highs on its way to the September 28th high of 11.0116.
The Norges Bank left rates unchanged, however said that it expects to hike rates at the March meeting. USD/NOK is currently at a key confluence of support levels, which if broken, target a big move lower towards the head and shoulders target of 8.3817. However, if the support holds, USD/NOK can move back towards the recent highs of 11.0116.
Learn more about forex trading opportunities.
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.
ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.
City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.
The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.
The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.
The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.
StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.
This advertisement has not been reviewed by the Monetary Authority of Singapore.
© City Index 2024