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    IronFX Intraday Comment | USD/NOK | 02/10/2015

    • The dollar traded mixed against its G10 peers during the European morning Friday, ahead of the US employment report for September. It was higher against NOK, SEK, EUR and JPY, in that order, while it was lower vs NZD and AUD. The greenback was virtually unchanged against CAD, CHF and GBP.

    • The UK construction PMI rose to 59.9 in September from 57.3 previously, beating expectations of a moderate rise to 57.5. GBP bounced briefly on the news but gave back half of the gains in the following minutes. The unexpected increase in the construction PMI following the improved manufacturing PMI on Thursday, adding to speculation about another positive surprise in the service-sector PMI next week. This will shed further light on the strength of the country’s growth in Q3. The most important day remains next Thursday, when the BoE will hold its policy meeting. BoE officials have had quite an optimistic tone in their recent speeches, thus another dissenting voter cannot be ruled out. In such case, GBP could regain its strength.

    • The Norwegian krone strengthened after the country’s unemployment rate declined in September. Nevertheless, it gave all the gains back immediately and USD/NOK continued to trade higher. Even though the country’s unemployment rate is low and the CPI is close to the Bank’s 2.5% target, low oil prices, along with the soft industrial production and weak manufacturing PMI, pushed the Norges Bank to cut rates at their September meeting. Given that the Bank also maintained the likelihood for further cuts, I would treat any NOK strengthening as renewed selling opportunity.

    • USD/NOK traded higher during the European morning Thursday after it hit support slightly above the 8.4000 (S1). Although the rebound may continue for a while, the price structure is lower peaks and lower troughs within a short-term downside channel. As a result, I would consider the short-term bias to be negative and I would treat today’s recovery as a corrective move. However, I prefer to wait for a move below 8.4000 (S1) before trusting that short-term downtrend again. Such a move could open the way for our next support at 8.3250 (S2). Our short-term oscillators support that the rebound may continue a bit more before the bears decide to shoot again. The RSI turned up and could move back above its 50 line, while the MACD shows signs of bottoming near its zero line. As for the broader trend, as long as USD/NOK is trading above the uptrend line taken from the low of the 22nd of August 2014, I would consider the major path of this pair to be positive. Hence, I would treat the short-term downtrend as a retracement of that prevailing long-term upside path.

    • Support: 8.4000 (S1), 8.3250 (S2), 8.2400 (S3)

    • Resistance: 8.5000 (R1), 8.5430 (R2), 8.6000 (R3)

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