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NOK: Risk-Off Sentiment Weighs On Krone, Complicating Norges Bank Guidance

NOK

Ongoing risk-off sentiment has weighed on Scandi currencies, with NOK seeing an additional headwind from Brent crude futures, which are almost 2% lower today. 

  • Crude markets have extended Friday’s decline despite the increased possibility of Iran/Hezbollah conducting a retaliatory attack on Israel in the near future. 
  • EURNOK briefly pierced the May 2023 high at 12.1064 before fading, but remains over 1% higher today.
  • A clear breach of 12.1064 would open up clustered resistance at 12.20 (round number resistance) and 12.2352 (61.8% projection of the Jun 21 - Jul 25 - Aug 1 price swing).
  • Renewed NOK weakness will complicate matters for the Norges Bank ahead of the August 15 decision, especially if Friday’s July CPI reading remains below the June MPR projections.
  • A reminder that the June MPR rate path indicated that the first rate cut would likely not be delivered until Q1 2025.

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