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USD/NOK. Should we get ready for the correction?

Aug 20 2019, 10:12 PM (BDT) | OlympTrade.com

Good afternoon! The first half of the week might be really boring. Nothing special is to come out. The most important news of Tuesday came from Australia – the RBA released its meeting minutes. According to monetary authorities, ‘near-term indicators relating to trade, manufacturing and investment had remained subdued’. There isn’t anything new, is there? Australia’s economy is resource-oriented and relies strongly on mineral oil prices. China is its top trading partner. Almost 30% of all Australian export goes to China. As a result, the concern about the Chinese economy is quite understandable.

Picture 1. Top 15 Australian trading partners

The summary of the RBA members meeting was the following: ‘Based on the information available and the central scenario that was presented, members judged it reasonable to expect that an extended period of low interest rates would be required in Australia to make sustained progress towards full employment and achieve more assured progress towards the inflation target’.

On Wednesday, we are waiting for the FOMC meeting minutes, which come out at 6 p.m. GMT. On Thursday, annual symposium starts working at Jackson Hole.

We would like to draw your attention to the Norwegian krone. On Wednesday, Norway releases its GDP. The country’s economy is also at high risk owing to BREXIT and possible recession in German economy (21% of Norway’s export goes to the UK and 16% of it goes to Germany). According to the latest data on trade balance, the trend is negative.

Picture 2. Norway trade balance

 

The USD/NOK pair has been rising since early 2018. But the currency of Norway may try to strengthen in the short term. Technically, the pair has reached its historical high (8,99366) and is now trying to break it. We think that there is a possibility of a correction before a breakout.

From the technical side, there is a divergence between the price and the MACD histogram. The Williams %R is in the oversold zone, and is ready to break it down.

Going short is possible if the USD breaks its 9-EMA (8,95000). In this case, the first target will be 8,90806, and the second support level will be 8,82402.

 

Picture 3. USD/NOK 1D TF.

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