Topic: Norway NOK Rate Decision May 6 2021
What does the data mean to the market?
The Norges Bank decision on where to set the benchmark interest rate. Traders watch interest rate changes closely as short term interest rates are the primary factor in currency valuation.
A higher than expected rate is positive/bullish for the NOK, while a lower than expected rate is negative/bearish.
Historic deviations and their outcome
May 7 2020
A further cut of 0.25% leaving interest rates at an unprecedented 0.00%
March 20 2020
A further emergency cut of 0.75% to the interest rate, Leaving interest rates at 0.25%
See Chart here:
March 13 2020
An emergency cut of 0.50% to 1.0% interest rate due to the global pandemic unfolding and the expected significant impact on the economy. This the first cut to interest rates since 2016
The world started to go into a meltdown as the realisation of a global pandemic began to unfold. There is no surprise the reaction to this was so poor, not even a blip on the charts.
Due to the unprecedented times, this is the first in a series of emergency cuts, which resulted in minimal price action. Usually, we would see hundreds of pips if a cut of this nature happened in normal times. A reminder of the impact Covid had in 2020, which I'm glad to say is now behind us, and I'll be watching these announcements now and looking for a normal reaction to the data as it's released.
See Chart Here
I will use forecasts of:
Interest Rate Decision 0.0
Today's trade plan
I will set up for any deviation on this trade, although I expect a no-trade as 100% of economists predict no chance of a change in today's rate. However, if a surprise did happen, I would be devastated I wasn't ready.
Hope this helps but please do your own analysis!!
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