USD/NOK trades at 1-week lows, focus on FOMC, Norges Bank

The USD/NOK currency pair extended a string of losses on Monday, while touching a fresh one-week low of 10.5814, as investors largely expected a super-sized interest rate cut by the Federal Reserve this week.

Meanwhile, data showed Norway’s trade surplus had expanded in August.

Markets are now pricing in about a 59% chance of a 50 basis point Fed rate cut at the September 17th-18th policy meeting, compared to a 27% chance a week ago.

Futures markets continued to price in 125 basis points of Fed rate cuts by the end of this year.

The yield on US 10-year Treasuries plunged to 3.34% on Monday, just above lows last seen in May 2023.

US 10-year bond yields saw a 30 basis point drop in the past two weeks.

On the macro data front, a report by Statistics Norway showed that the country’s trade surplus had risen to NOK 66 billion in August from NOK 64.5 billion in the same month of 2023.

Total exports rose 6.2% year-on-year to NOK 153.2 billion in August, while total imports went up 9.2% YoY to NOK 87.2 billion.

Norges Bank is also scheduled to hold a policy meeting on Thursday, at which borrowing costs may be kept on hold. The central bank, however, may hint at a rate cut in December.

As of 10:37 GMT on Monday the USD/NOK currency pair was losing 0.50% to trade at 10.5842.