USD/NOK (USD vs. Norwedgian Krone) Live Chart

The USD/NOK pair is an interesting one, because while it is considered to be a “minor” currency pair, it is borderline “exotic.” At first glance, this pair scares a lot of traders. This is because the market tends to be erratic, but when you look at this market from a longer-term perspective, patterns emerge. In other words, this is not a market that you will want to jump into and start trying to scalp. It is most certainly a long-term trader’s type of market, but it does have the ability to trend for very long periods of time, which makes it an excellent market to be involved in over the longer term.

USD/NOK Live Chart:

What Economic Events Impact the USD/NOK?

One of the first things you need to know about the Norwegian krone is that it is highly influenced by the crude oil markets. This is because most of the oil rigs in the North Sea are Norwegian. With that being the case, the Krone is considered to be a petrocurrency. As the price of oil rises, typically the value of the Norwegian krone does as well, and vice versa. With that being the case, the market has a bit of a singular use: to play the value of oil by Forex traders.

You have to keep in mind that economic activity between the United States and Norway isn’t very large, so corporate funds going back and forth across the borders will have minimal effect. However, there are certain economic announcements that can influence this particular market. Obviously, interest-rate announcements out of both the Norges Bank and the Federal Reserve will move this currency pair over the longer term. As mentioned previously, this is a proxy for crude oil, so the price of crude oil will certainly influence this market. Crude Oil Inventories announcements out of the United States will obviously have an influence as well, as dwindling inventories means higher demand for the commodity. The higher the demand, the more likely it is that money will have to flow into Norway to purchase more oil.

Other economic announcements to be aware of will include GDP, PPI, and employment. After all, the more economic growth and activity there is in the United States, the more likely it is that there will be need for energy. This of course has a knock on effect in this pair as petroleum typically gains momentum in those particular situations. This of course works in both directions, so if economic numbers are dwindling in the US, it’s very likely that the value of the Norwegian krone will fall as the demand for oil does.

What is the Average Spread on the USD/NOK?

The spread on this pair is particularly large. However, the PIP value is particularly small so it tends to work out in the end. You have to be aware the fact that it’s quite often than the spread is about 50 pips. While that sounds horrible, the truth of the matter is that the PIP value is small enough that it really doesn’t make too much of a difference. Besides, this is a pair as mentioned in the beginning of this article that should be traded for the longer term. When you trade a move in this pair, you are aiming for hundreds of pips, if not thousands. With that being the case, 50 pips really isn’t much of a price to pay. Because of this, short-term traders of course are not interested as the barrier to entry becomes too high. After all, it’s hard to convince a scalper that they need to hang on for 300 pips to make the trade worth their while.

Nonetheless, as a Forex trader this gives you the ability to play the crude oil markets by proxy. Because of this, this is a pair that you should be paying attention to and perhaps have a position in for the longer-term perspective.

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