Forex Investment and Currency Trading

It has been a point of note that EUR/NOK has been impervious to the moves in oil prices for the past year, that is until September. Specifically, EUR/NOK did not respond to the rise in oil prices to $145/bbl and did not break out of its range to the upside until oil had fallen to around $100. This is at odds with the template laid out in 2005-2007 when EUR/NOK much more closely followed the move in oil prices – most notably demonstrated pre and post Hurricane Katrina. Instead $/NOK has been much more closely correlated with the oil price, mirroring the abnormal relationship between EUR/$ and oil, leaving EUR/NOK a derivative of the Dollar crosses. Consequently it is not entirely true to conclude that the relationship between oil and NOK has broken down. The typical regime may be re-established when the relationship between EUR/$ and oil returns to a more ‘normal’ scenario.