Forex Flash: USD/NOK under pressure as equities rise in US – UBS

The initial wave of NOK downside was via the EUR/NOK as Qvigstad's comments earlier this year prompted revisions of policy expectations. This was also happening during the 'AAA unwind' phase in favor of the EUR, and the effects are still being felt. Indeed, “USD/NOK buying had some of these elements as well, however now with US equity markets clearly outperforming and data also continuing to register relative and absolute gains, it is no surprise that unwinding is happening across the board and given the small size of the Norwegian asset market, the unwind is hurting the currency disproportionately.” notes Research Analyst Gareth Berry at UBS.

In some respects, the USD/CHF and USD/NOK both reflect the changing correlations of the dollar where a combination of fading marginal stimulus, stronger growth and limited exposure to the Eurozone are providing the greenback with growth status.