OVERVIEW – The rebound in risk appetite and
concurrent surge in commodity prices in the early week has once again
fueled some fresh currency buying with the highly correlated regionals
benefiting as a result. Gold prices have rallied to record highs by
$1160, while crude oil is inching back towards $80. There are no
economic releases scheduled for Mionday, so look for the krona and
krone to trade off of the broader global macro price action. In Norway,
FinMin Johnsen has been on the wires saying that the country will need
to remove government stimulus in order to help offset undue NOK
appreciation. Norway was the second major economy to reverse the global
monetary easing cycle with the relative strength in the economy likely
to result in more hikes in the near future. The NOK is the best
performing currency in the second half of the year, up some 7% against
the Euro and 14% against the USD. However, manufacturers in Norway are
starting to feel the pains of a stronger currency and would like to see
the krone reverse course to help bolster their bottom line profits.
Eur/Sek pullbacks should be well propped ahead of
10.15 with the market in the process of carving a meaningful base on
the daily chart. Look for the latest bullish price action to now open
the next push back towards the recent range highs by 10.53. Only back
under 10.15 concerns.
Eur/Nok despite the latest setbacks, we still view the
overall price action as constructive since the market broke back above
8.41 in mid-October. Look for the price to be well supported ahead of
8.30, in favor of a bullish resumption back above key short-term
resistance at 8.56 over the coming days. Ultimately, only below 8.24
Usd/Sek our view is still constructive at current
levels despite the latest setbacks and favors USD appreciation over the
coming weeks. We contend the market is attempting to carve out a major
base rather than in the process of some bearish consolidation. The
recent break back above 7.10 confirms bias and exposes 7.40-50 further
up. Any setbacks are expected to be well supported ahead of 6.75, while
back above 7.20 accelerates.
Usd/Nok even with the latest pullbacks, we still
retain a constructive outlook for the pair with the market looking to
carve out a major double bottom on the daily chart. We do not
anticipate a retest of the recent 5.50 lows and instead favor a bounce
at current levels back towards neckline resistance at 5.85, a break of
which will trigger the double bottom formation.
Gbp/Nok recovery rally has pulled back since reaching
9.53 in the previous week, but our outlook remains constructive, and a
higher low is now sought out above 9.00, ideally by 9.23, ahead of the
next upside extension beyond 9.53.
Nok/Jpy as had be warned, the market was well
overextended above 16.50 and the price has since retreated back into
the well defined range. Deeper setbacks are now seen towards 15.50 over
the coming sessions. Rallies are expected to be well capped ahead of
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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