USDNOK has failed to take the lead from the huge sell-off in energy prices. History shows that this divergence is not likely to last long – with the most likely path one of USDNOK higher. A recent history of USDNOK and Brent crude oil prices shows the degree to which NOK remains a “petro-currency” whether or not the market is trying to play it from the safe haven or other angles. The recent sell-off in gold has been grabbing the headlines, but we’ve also seen a brutal sell-off in energy markets, one that should be hitting NOK a bit harder than it has thus far, so we might should look for USDNOK to begin the go the way of crude soon if energy markets can’t snap strongly back from their steep sell-off.
Chart: USDNOK vs. Brent Crude
See if you can spot the correlation (crude oil prices are inverted) Of course, it’s not always there from week to week, but USDNOK and Brent crude have a 2000-trading day correlation of -0.819.
Chart: USDNOK Daily
Technically, the chart is somewhat similar to EURUSD, in that the 55-day moving average is providing the support for the US dollar. For USDNOK, the 200-day moving average is a bit closer than for EURUSD and is clearly also influential. We’ll keep this one on our Trade Ideas radar screen, perhaps looking to buy one unit soon with a stop below the recent lows and then buying another if we get a confirming move higher through the 200-day moving average/5.75 area. Longer term, we should eventually go on to challenge 6.00 and the 2012 highs above 6.10.
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