Norwegian crown's fortunes could be about to change
June 14 (Reuters) -Norway's crown is holding a bullish bias versus the euro but has struggled to gain any meaningful ground versus its Swedish counterpart, and this despite policy divergence between the Norges Bank and Riksbank. This scenario might be about to change as NOK/SEK charts begin to improve.
The Norges Bank is on hold and when its first rate cut comes it is likely to be in 2025, a clear distinction when compared with the European Central Bank and the Riksbank, both of which have already lowered rates by 25 basis points.
Fears that the Norges Bank stance might harm economic growth prospects will have been dispelled by the latest central bank regional network survey. The survey, released on June 13, shows a broad-based improvement, with higher wage and employment expectations and only the construction sector seen lagging all other sectors of the economy.
The Viking cross has been playing out a period of loss consolidation since falling below its daily Ichimoku cloud on June 5. Long lower candlestick shadows this week suggest NOK supply might be fading and that NOK/SEK could be about to turn higher. For the recovery to take hold resistance at the cloud base and 10-day moving average, 0.9866 and 0.9868 respectively, need to be breached.
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NOK/SEK daily candle chart: https://tmsnrt.rs/4exW0kW
(Peter Stoneham is a Reuters market analyst. The views expressed are his own)
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