The Norwegian Krone is trading on the defensive for yet another session, taking EURNOK to fresh multi-week tops in the 10.07 area, just to recede soon afterward.
29 August 2019, OctaFX – NOK remains on the back footing today, although it has managed to abandon the area of daily lows vs. the single currency following the release of GDP figures.
In fact, Norwegian GDP Mainland (excluding shipping and oil and gas extraction activity) showed the economy expanded at a quarterly 0.7% during the April-June period, a tad below expectations and Norges Bank’s projections. In addition, Q1 GDP figures were revised higher to 0.5%QoQ (from 0.3%).
The manufacturing sector and the services sector led the uptick in the economic activity, while activity in wholesale and retail decreased. Additionally, household consumption remained firm (up 0.3% QoQ) and the employment rate went up by 0.4% in Q2.
All in all, the health of the Nordic economy remains solid and reinforces further the case for extra tightening by the Norges Bank at the September meeting.
What to look for around NOK
Another rate hike by the Norges Bank at the September meeting now appears to be on the horizon in light of better results from key fundamentals and despite the Scandinavian central bank showed some unexpected flexibility regarding the future rate path at the latest event.
In the meantime, and while the Nordic economy keeps its shine intact, developments overseas, particularly those linked to the US-China trade war, could cast dark clouds on the domestic economic outlook and hurt the central bank’s perspective and undermine at the same time the bullish prospect for the Krone.
EURNOK technical analysis
As of writing the cross is gaining 0.24% at 10.0376 and faces the next hurdle at 10.0694 (high Aug.29) seconded by 10.0972 (2019 high Aug.7) and then 10.1174 (all time high December 2008). On the other hand, a break below 9.9668 (21-day SMA) would expose 9.9014 (low Aug.14) and finally 9.7860 (55-day SMA).
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