The USD/NOK pair might look like a commodity-focused pair at first glance, as the economies of both countries are indeed heavily reliant on commodities, but surprisingly, it is not that. It is not a major either, given how the NOK is not a major currency.
The USD is currently the world’s premier currency in several regards. It is by far the most traded currency, as well as the most popular reserve currency. Despite recent inflationary pressures, the value of the USD has remained high and it is still the benchmark by which the price of commodities such as oil and gold are determined. The budding digital economy measures the value of its cryptocurrencies against the USD too.
The USD was the currency which started the floating trend back in the 70s. The greenback is supported by the largest economy of the world. The main trading partners of the US are Canada, Mexico, China, Japan and Germany.
The Norwegian Krone is a commodity dependent currency. Indeed, the Norwegian economy relies on the natural resources (which are plentiful) of the country for growth. The North Sea contains massive natural gas and petroleum reserves, and Norway has thus far exploited these resources wisely.
Hydroelectric power is another major asset that lends strength to the NOK, together with the fisheries and food-production facilities the country is also known for. Norway is not an EU member, therefore the NOK is not threatened with replacement by the EUR.
While most of Norway’s commodity exports are destined for the UK and the EU, the fact that oil prices are expressed in USD, ties the two currencies together. Commodity price fluctuations may open up good trading opportunities on this pair, given the relative size of Norway’s economy and their impact on it.
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