A NOKout in round 1 - Why the NOK will win 2024
Updated
Over the past two years, the Norwegian krone has undoubtedly been one of the big losers in the FX market.
Not only has it embarrassingly been constantly beaten up even against the EUR and traded at an all-time low, no, since November 2022 it has bottomed vs. ALL G10 currencies.
This was hardly surprising as almost all fundamental factors spoke against the NOK.
However, the tide will turn dramatically in 2024:
NOK positive:
➡️ Energy prices appear to have bottomed out and could rise again🟢
➡️ The oil price seems to be stabilising around the USD 60-70 mark and could rise in the event of a soft landing🟢
➡️ January and February are seasonally positive for the NOK🟢
➡️ Norges Bank surprised EVERYONE in December by raising interest rates again🟢
➡️ Norges Bank enters 2024 as one of the hawkishest of the G10 central banks
➡️ A further rate hike by Norges Bank in early 2024 cannot be ruled out🟢
➡️ It would raise interest rates while virtually all other central banks would be in rate cut mode🟢
➡️ Norges Bank will drastically reduce its NOK purchases from January (as previously announced by me in the NOKSEK Tradeidee), see here:
Not only has it embarrassingly been constantly beaten up even against the EUR and traded at an all-time low, no, since November 2022 it has bottomed vs. ALL G10 currencies.
This was hardly surprising as almost all fundamental factors spoke against the NOK.
However, the tide will turn dramatically in 2024:
NOK positive:
➡️ Energy prices appear to have bottomed out and could rise again🟢
➡️ The oil price seems to be stabilising around the USD 60-70 mark and could rise in the event of a soft landing🟢
➡️ January and February are seasonally positive for the NOK🟢
➡️ Norges Bank surprised EVERYONE in December by raising interest rates again🟢
➡️ Norges Bank enters 2024 as one of the hawkishest of the G10 central banks
➡️ A further rate hike by Norges Bank in early 2024 cannot be ruled out🟢
➡️ It would raise interest rates while virtually all other central banks would be in rate cut mode🟢
➡️ Norges Bank will drastically reduce its NOK purchases from January (as previously announced by me in the NOKSEK Tradeidee), see here:
Note
📊🇨🇭This week we got the Swiss CPI which could bring some volatility into the market📊🇨🇭Inflation data out of Switzerland over the next two months:
-> It will rise slightly, as the higher electricity prices are now having an bigger effect and also rental prices, which are adjusted once a year in Switzerland, will also contribute to an increase.
Note
🟢 Next wednesday will be a real Highlight:📊🇸🇯We get PPI and CPI out of Norway.
-> Should both surprise upwards it would raise the odds of a further rate hike by the Norges Bank massively🟢
-> would boost my NOKCHF Short Trade in the right direction✅️
Note
🇨🇭📊As forecasted the Swiss CPI saw a rise towards 1.7%.📊🔮And as I said the next month will see a rise again this time to 2% or maybe even slightly above🔮📊
-> BUT: This rise will be temporary so the SNB won't act on it.
🏛🇨🇭I see the SNB cutting rates in June 24🟢
The trade will take some more time till the market also gets that the rise in inflation will only be temporary.
🔮Thats the curse of knowing where inflation and the economy is heading, often you have to wait for the market till he gets it.
Note
🏛🇨🇭This week we have the SNB's interest rate decision and Norges Bank's🏛🇸🇯Norges Bank, THE 2 most important events for the CHFNOK currency pair.
I don't expect any major surprises from Norges Bank, but at the same time the SNB's stimulus could be much greater if it cuts interest rates (40% market expectation)🟢
But even if there is no interest rate cut (60% market expectation), my trade will very likely continue slowly but surely to turn a profit in the long term✅️
Translated with DeepL.com (free version)
Note
🏛🇨🇭 And the SNB was actually the first of the G8 central banks to cut interest rates back in March-> the CHF got a good beating💥💥💥 (as expected)
-> great for my CHFNOK Short✅️
-> 🔮my prophecy from December last year came true🔮
! 🔮But that's not all folks🔮 !
-> 🏛🇨🇭Ich expect the SNB to cut interest rates again in June🔮
-> the CHF train will continue its downwards journey✅️
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