Norway to Raise Interest Rates; Kroner Due for Upward Correction
October 27th, 2009 Posted in Chief Analyst Special Report
It appears Norway is preparing to be the first European country to raise its benchmark interest rates during its rate statement announcement tomorrow morning. With rising oil prices assisting with the Norwegian economic recovery, Norway was able to emerge from the global recession during the second quarter of 2009. The NOK has also risen against the EUR and USD by around 10% over the past few weeks.
On the other hand, the USD’s sudden emergence yesterday afternoon put a temporary setback for the Scandinavian Kroner against the greenback, but many expectations do not yet put the Dollar in a position to overtake the Scandinavian currencies. If Norway does indeed raise its rates by around 0.25%, the Norwegian Krona will be revalued in at a higher level as monetary easing is restricted slightly.
- The chart below is the 4-hour USD/SEK chart by ForexYard.
- The indicators used are the Stochastic (slow) and Williams Percent Range.
- Point 1: Despite the upward movement from the USD’s rally yesterday, the price has not yet breached the downward trend, meaning the SEK is still in a strong position relative to the USD.
- Point 2: There is a fresh bearish cross on the Stochastic (slow) indicating an impending downward correction. This supports the notion that the down-trend will not likely be broken.
- Point 3: The Williams Percent Range shows that this pair was heavily over-bought, peaked near the highest mark it could reach, and then turned a corner and now stands in a bearish posture. This also highlights the impending bearishness this pair will likely see over the coming hours.
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Tags: Denmark, DKK, EUR, EURNOK, Forex, forex analysis, forex blog, forex market, Forex Trading, interest rates, NOK, Norway, Scandinavian, SEK, Sweden, USD/DKK, USD/NOK, USD/SEK
