USD/NOK Outlook:
Bearish, as the rate is below its recent average and near recent lows.
Key drivers:
• Rate gap: The Federal Reserve's decision to hold interest rates contrasts with Norges Bank's cautious approach, affecting USD/NOK dynamics.
• Risk/commodities: Oil prices are currently above average, which supports the Norwegian Krone since Norway heavily relies on oil exports for revenue.
• One macro factor: The slowdown in US retail sales raises concerns about overall consumer spending strength, which may further weaken the USD.
Range:
Movement is likely to drift within the recent range, as the rate has stabilized at lows with limited upward momentum.
What could change it:
• Upside risk: A surprising improvement in the US labor market could bolster the USD.
• Downside risk: Continued geopolitical tensions leading to increased investor caution could pressurize the USD lower.
