USD/NOK slid during the European morning Thursday

USD/NOK

The dollar traded unchanged against most of its G10 peers during the European morning Thursday. It was higher against EUR and CHF, while it was lower only against NOK.

EUR/USD moved lower as the bloc’s preliminary Eurozone composite PMI fell to 51.4 in November from 52.1 previously, below market expectations of 52.3. Even though the figure managed to remain above the neutral level for the 17th consecutive time, November’s reading was the lowest since July 2013. However, what came as more of surprise was the decline in German manufacturing PMI from 51.4 to 50.0, the threshold dividing expansion from contraction. The below consensus figure caused euro to brush aside any early gains triggered from the increase in France preliminary composite PMI. The overall poor PMIs are consistent with a slowing in the pace of the Eurozone’s recovery and could weigh more on the bloc’s single currency.

The British pound remained stable despite the strong rebound in retail sales. Retail sales rose 0.8% mom in October, a turnaround from -0.3% mom in September and exceeded the forecast of +0.3% mom. While the GBP/USD gyration around the 1.5650 may continue, the fact that the BoE is likely to avoid raising rates around general election in May and as long as Cable is trading below the 80-day exponential moving average, the overall path remains to the downside in my view.

The Norwegian krone was the only gainer during the European morning, after the country’s GDP for Q3 came in right on the +0.5% qoq consensus from a revised +1.1% qoq in Q2. NOK was boosted however by the upward revision of Q2 GDP to 1.1% qoq from +0.9% qoq before. Despite the move higher, I still believe the increased uncertainty over Norway’s economy is likely to put NOK under selling pressure and I would treat the current setback as renewed USD/NOK buying opportunity.

USD/NOK slid during the European morning Thursday after finding resistance near the 6.8100 (R1) barrier. Although the near-term trend remains to the upside, I would be cautious that the minor down wave may continue, perhaps for a test at the support line of 6.7100 (S1). My worries are derived by our near-term oscillators. The RSI moved lower and seems willing to cross below its 50 line, while the MACD, has topped marginally above its zero line, turned negative again, and could move below its signal line any time soon. However, as I mentioned above, the near-term trend remains to the upside. The rate is still trading above the black uptrend line drawn from the low of the 3rd of September. On the daily chart, USD/NOK stands above the 50- and the 200-day moving averages and well above a longer-term uptrend line taken from back at the low of the 8th of March. This confirms that the overall picture of the pair remains positive.

• Support: 6.7100 (S1), 6.6400 (S2), 6.5700 (S3)

• Resistance: 6.8100 (R1), 6.8700 (R2), 6.9300 (R3)