USD/NOK
The story that dominates the FX market remains the same as in the morning. All EM currencies continued to plunge after tightening policy from several EM central banks failed to support the currencies, as concerns move to the impact of domestic growth. The main losers were HUF, ZAR and RUB with the former depreciating the most. This crisis drove EM stock markets lower and they continued to fall during the European morning.
Among the G10 currencies, the dollar was higher against most its rivals except JPY, AUD and CAD. JPY kept its upward path as tensions in EM increased demand for safe-havens. AUD was higher on what it seems to be profit-taking positions after the decline on the weak HSBC manufacturing PMI from China. Nonetheless, I would expect the currency to come under further pressure in a risk-off environment combined with global liquidity reduction by central banks.
NOK continued to be a major loser ahead of tomorrow’s employment data, which are estimated to show a rise in the unemployment rate for January. November’s Norway labor force survey, released yesterday, showed an increase.
USD/NOK rallied during the last hours of trading activity, violating the upper boundary of the trading range between the 6.0575 and 6.2180 (S1) barriers. I would expect the pair to continue its advance and challenge July’s highs at 6.2645 (R1). The MACD lies above both its trigger and zero lines confirming the recent bullish momentum, but the RSI seems ready to enter its overbought territory, as a result some consolidation or a pullback upon the oscillator’s exit from the extreme zone, cannot be ruled out.
Support: 6.2180 (S1), 6.1970 (S2), 6.1580 (S3)
Resistance: 6.2645 (R1), 6.3500 (R2), 6.4000 (R3)
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