The USD/NOK price fell sharply today after the interest rate decision by Norges Bank.
The bank left the interest rate unchanged, as most analysts had expected.
It is also falling because of the overall weaker US dollar.
The USD/NOK pair has fallen more than 0.80% as traders react to the U.S. election and Norges Bank’s interest rate decision. It is trading at 9.2500, the lowest level since October 28th.
USD/NOK falls after Norges Bank’s decision
Interest rate decision of Norges Bank
The Norwegian Central Bank today concluded its two-day monetary policy meeting and decided to leave the interest rate unchanged at 0.0%. This was in line with the expectations of most analysts surveyed by Reuters.
It was also in line with the Bank’s Monetary Policy Report published in September. In this statement, the bank indicated that interest rates would remain at current levels for several years.
In the statement, the committee stated that the country’s economy is in a deep contraction phase caused by the Covid pandemic. In fact, the number of cases has risen sharply recently. Yesterday the country confirmed more than 1,000 cases, which is a record. This brought the total number of cases to more than 22,000 and the number of deaths to over 282. As a result, the government has tightened the rules to slow the spread.
However, the bank noted that the economy had begun to recover. It cited the housing market, where prices have continued to rise. Inflation has declined, but is also above its previous target. However, it indicated that prices will remain low due to a higher unemployment rate. The statement said
“The underlying inflation has decreased but is still above the inflation target. The impact of the depreciation of the krona at the beginning of 2020 is gradually fading. This, together with the prospects of low wage growth, suggests that underlying inflation will ease in the coming years”.
The USD/NOK is also falling due to the ongoing vote count in the United States. At the time of writing this article, Joe Biden is leading the referendum and the electoral college. As such, he is more likely to win the election, which has a negative effect on the dollar.
In addition, the dollar will fall before the Fed’s interest rate decision, which will be released at 19:00 GMT. Like Norges Bank, investors are not pricing in a rate cut by the bank and a relatively deaf tone.
USD/NOK technical outlook
USD/NOK technical table
On the four-hour chart, we can see that the USD/NOK pair has been in a strong downward trend this month after finding strong resistance at the 9.6038 level. The price has since moved below the 38.2% Fibonacci retracement level. It is also below the 50-day and 25-day exponential moving averages. Therefore, it appears that the bears have total control, meaning that they will target support at 9.1222 next.