Norwegian Krone at Two-Month High vs Yen, Euro and Pound Ahead of Unemployment Data; NOK/SEK at 14-Month High

The Norwegian Krone is trading at a two-month high versus the yen, the euro and the pound as the market is waiting for the unemployment rate and retail sales numbers from Norway in the week to 29 August.

Against the Swedish Krona, Norway's currency is at a crucial resistance level, a decisive break of which might help the NOK/SEK cross to reverse the downtrend since 2009.

Data releases from Norway in August were largely higher side surprises, helping its currency strengthen 3.02% versus the yen, 3.07% against the euro and 3.8% versus the sterling.

Norway's consumer price index rose 2.2% from a year earlier in July from 1.9% rise in June while retail sales growth increased to 0.9% in June from 0.2%.

A bigger surprise was the GDP growth rising to 0.9% in the second quarter from 0.2% in the previous quarter.

The market is now waiting for the labour force survey for June on 27 August and the unemployment rate on the 29th.

The unemployment rate had increased to 3% in July from 2.7% in June as per Juy data and Friday's number is likely to be a major driver for the Kroner.

The total number of unemployed for August will also be a figure to watch after it came at 87,270 in July. The next data point in the week will be the July retail sales number, also scheduled for Friday.

As the main message from major central banks like the Fed, the ECB and the BoJ at the just concluded Jackson Hole symposium is their intention to stick to accommodative policies for some more time, risk assets are likely to strengthen further.

NOK/SEK Outlook

In Sweden, the year-over-year consumer price inflation for July was 0% after rising 0.2% in June.

The unemployment rate, however, had fallen to 7.1% for July from 9.2% in the previous month, but that positive was not enough to outsmart the Norwegian currency which had been supported by a wider range of fundamentals.

The market is waiting for the producer price and trade data for July and consumer confidence indicator for August, due in the week to 19 August.

Meanwhile, the NOK/SEK cross is trading near a 14-month high and is technically biased to hit bigger highs.

The cross is now testing the 50% retracement of the 2011-2014 selloff and a decisive break above this level will open the doors to 1.1415, the 61.8% level, ahead of a retest of the 2011 peak of 1.2100.

On the downside, the cross will eye 1.1020 and 1.0760, the 38.2% and 23.6% Fibonacci retracements as immediate supports and then 1.0545 ahead of a retest of the yearly low of 1.0343, touched in February.