USDNOK Edges Higher on Mixed Employment Data; Coronavirus Spread
The USDNOK is trading higher as the Norway employment data came in below market expectations, but not in a manner as to stave off the coronavirus-induced risk-off sentiment that has affected the commodity currencies.
Norway’s Registered Unemployment n.s.a came in at 2.4%, which was below the 2.5% reading that market analysts had expected. Similarly, Norway’s Registered Unemployment s.a was recorded at 75.67K, which was lower than the 76.7K that the markets were expecting.
On the back of the news conflict, the Norwegian Krone continued to lose ground to the safe-haven US Dollar, trading at close to 9.22477.
Commodity currencies have had a dreadful week, as their exposure to the risky global assets have caused them to lose value due to fears of economic slowdown and reduced demand from coronavirus-hit China. China is the world’s largest importer of crude oil, which is one of Norway’s export products.
The USDNOK has been trading within the ascending channel from May 2018 till date, allowing the pair to trade within identified boundaries. However, intervening support and resistance areas formed by previous highs and lows of price action will also play a role in defining price activity. Currently, the USDNOK is testing one of such highs at 9.22477 (previous highs of the last two monthly candles). A break of this price level to the upside will open the door for the USDNOK to retest its all-time highs at 9.30935, seen previously on 29 October 2019.
Conversely, if the USDNOK fails to break the current resistance, a pullback to the previous support at 9.10269 cannot be ruled out. Below this area, further support exists at 9.04726.
The latest price spike that saw a steep rise in the USDNOK from 23 January 2020 to date may be hard to sustain. If the coronavirus fears disappear from the markets, then the pullback scenario gains increased probability.