At the start of the week the Norwegian Krone (NOK) advanced on peers like the British Pound and US Dollar as the price of crude oil, a major Norwegian commodity, advanced to a 2015 high.
After falling by around 60% since the middle of last year due to excessive production, the price of crude oil bottomed out at a six-year low of 42 Dollars a barrel in mid January.
However, since then various factors, from the death of the Saudi Arabian King to the conflict in Syria, have seen the price of crude stage a modest recovery.
On Tuesday the price of the commodity climbed to 62 Dollars a barrel, its strongest level of the year so far.
Middle Eastern supply concerns and the belief that US output might slow prompted the uptick and commodity-driven currencies like the Krone benefited from the development.
The Pound Sterling to Norwegian Krone (GBP/NOK) exchange rate dipped to a low of 11.5258, down from the highs of 11.8621 achieved the previous week.
As the week progressed, the price of oil fell by over 1 Dollar a barrel as investors bet that the asset’s recent rally was excessive. The drop-off saw the Norwegian Krone pare gains and the GBP/NOK exchange rate advanced by 0.6% on Wednesday.
The UK’s surprisingly upbeat employment figures also contributed to the Pound’s uptrend against the Krone.
The rate of UK unemployment slid to a 7-year low of 5.7% in the three months through December following a jobs surge of over 100,000 – more than double the employment increase expected.
The Krone was able to trade in a stronger position against the Euro though as ‘Grexit’ speculation persisted and economic data for the Eurozone showed a second monthly decline in construction output.
Norwegian data is in short supply this week, but further Krone fluctuations could be inspired by commodity price movements.
The Greek debt negotiations and US reports will also be of interest. Additionally, a final flurry of GBP/NOK movement may occur following the publication of the UK’s retail sales report on Friday.
Next week the Norwegian reports with the most potential to spark NOK volatility include the nation’s unemployment rate figure (scheduled for release on the 25
th
) and retail sales data.
During the European session the Pound Sterling to Norwegian Krone (GBP/NOK) exchange rate was trading in the region of 11.5928