Currency pair USDNOK on Forex
Until recently, it was believed that USDNOK belonged to the second group of traders’ interest after such instruments as pound/dollar and
euro/dollar.
This was due to the fact that USDNOK had low liquidity, unlike the above listed currency pairs, so it was no longer traders who were interested in it, but investors.
USDNOK is made up of two currencies, namely the American dollar and the Norwegian krone .
If we talk about the dollar, then almost all of us know what factors influence its movement, but few of you have thought about what makes the price of the Norwegian krone move.
Norway is a country that ranks fifth in the production and export of black gold.
Oil is the basis of the economy for this country, and the ability to supply raw materials to different countries has always greatly filled the state budget.
Thus, the unemployment rate in Norway during the global crisis did not rise above 3.7% percent. Thanks to oil sales, Norway was able to accumulate an insurance fund, which experts estimate at $875 billion.
However, despite its strong economy, Norway has an Achilles heel. The country's economy is very dependent on the state of the energy market, namely directly on the price of oil. It is believed that when oil prices rise, the NOK (Norwegian krone) rate also goes up. The decline in prices for black gold leads to a deterioration in the Norwegian economy, which is immediately reflected in the form of a fall in the national currency chart. You can see this relationship by opening a chart of oil and NOK.
Since the USDNOK currency pair consists of two currencies, the influence of the dollar on the movement of the price chart should not be ignored. So, for example, if the dollar sinks due to poor economic indicators, then the chart of the currency pair rapidly goes down, and with positive indicators it begins to go up. This is due to simple numbers, if the dollar has fallen in value, this means that we can buy more dollars for fewer crowns if there had been an increase.
At this stage, USDNOK should be of interest to traders only because the rapid fall in oil prices leads to a fall in the crown, which means an increase in the chart of the USDNOK currency pair. By tracking news on black gold, it is very easy to predict further price movements, which is why this instrument is becoming more and more popular. Many analysts believe that the crown will continue to fall as long as the price of oil continues to fall.
However, we should not forget that Norway has a large insurance fund and if necessary, the authorities will use it to support the country’s economy. Therefore, until this happens, it is worth taking a close look at the movement of oil prices and trying to make money on it. Thanks for your attention, good luck!