BNY’s Bob Savage highlights that earlier supportive flows into the Norwegian Krone from energy prices and hawkish Norges Bank policy are now fading. Commodity FX momentum is softening, with NOK seeing outflows as hedge demand unwinds and policy expectations peak. Savage judges that NOK has largely completed its re‑rating, with Norges Bank signaling only one further hike and resisting expectations of additional tightening.

Commodity FX flows and Norges Bank stance

"Markets remain uneasy, but recent trends still point toward gradual de-escalation, suggesting recovery flows could build while conflict hedges lose support. Commodity FX has led, especially in LatAm, along with NOK and AUD in the G10, which are benefiting from energy and hawkish policy, reinforcing carry dynamics."

"Meanwhile AUD has recorded its biggest three-day outflows and NOK has seen two days of outflows as policy expectations peak and hedge demand unwinds, though conviction remains low."

"Even while the energy backdrop remains supportive, we believe NOK has largely completed its re-rating, particularly as Norges Bank has signaled a commitment to one further hike while pushing back against the prospect of additional tightening."

"Norway’s consumer confidence index remained deeply negative in April at -19.1, little changed from March and highlighting persistently weak sentiment following the geopolitical shock from the Iran conflict."

"The index has remained well below recent averages, reflecting continued pessimism driven by high energy and commodity prices, ongoing trade uncertainty and expectations of further interest rate increases by Norges Bank."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)