Sharp Drop In Crude and USD Rally Feeds Through To NOK

The sharp fall in crude prices noted earlier has fed through into the oil-sensitive NOK, with EURNOK and USDNOK around 0.5% higher on the day.

• Less dovish Fed pricing and a strong USD aided bearish crude momentum, with the latter also pressuring the risk-sensitive NOK.
• Most analysts expect the Norges Bank to hold rates on Thursday, which may shield NOK from further weakness if rates were not raised, unless the decision was accompanied by overtly dovish guidance. A 25bps hike (still certainly on the cards) may provide some respite for the NOK.
• The move sees EURNOK break through the December 6 high of 11.8424 (currently trading at 11.8607), with the Nov 17 high of 11.8790 the next target before 11.90.
• NOKSEK sits 0.4% lower at 0.9540, with the May 3 low of 0.9498 the first support and bear trigger.
• Our Norges Bank preview, released earlier today, can be found here.