An Australian dollar and Norwegian krone pair will be suitable for traders trading in medium and long positions. The krone is characterized by stair pattern exchange rate fluctuations, due to which it is possible to get a very wide corridor.
Norway demonstrates the highest level of GDP and in all respects surpasses even the most developed European countries and the USA. But at the same time, there are many questions regarding the national currency in terms of stability. Therefore, we will conduct a tour of history.
The krone is the official currency of Norway. It was introduced in 1875 when the country joined the Scandinavian Monetary Union, which was created in 1873. After the collapse of the Monetary Union at the end of World War II, Norway, along with Denmark and Sweden, kept the name.
Norwegian Krone is divided into 100 øres. Coins were introduced in Norway in 1874, and some in 1875. Somewhere between 1875 and 1878, new coins were introduced. Banknotes consisted of bronze, silver and gold coins.
Bronze was used for 1, 2 and 5 øres, silver - for 10, 25 and 50 øres, coins in denominations of 1 and 2 krones, and gold - for 10 and 20 krones. Coins of 2 kroner were last issued in 1917. Production of 1 and 2 shillings was discontinued in 1972, 5 and 25 øres in 1982 and 10 øres in 1992.
Banknotes of 5, 10, 50, 100, 500 and 1000 krones were introduced in 1877. Coins replaced banknotes of 5 krones in 1963 and banknotes of 10 krones in 1984.
This information is crucial because it demonstrates that the country refused gold as a means of payment only at the end of the 19th century. European states did this much earlier.
Therefore, the financial success of Norway is not explained by a sound banking system, but by wise administrative management of assets. Most of the industrial sector is public. The domestic and foreign markets of the country are opposed.
As for the Australian dollar, the country initially developed according to the classical banking model, therefore, all AUD stability against external factors is quite high. The country was one of the first to replace paper money with polymer, and then completely switched to complete use of bank cards.
Such different currencies existing in systems isolated from each other are not regarded by traders as potentially interesting instruments. Nevertheless, you can make a profit on this pair.
As in Australia, the Norwegian economy is highly dependent on the raw material factor. The Norwegian krone exchange rate is determined by the price of oil due to the strong dependence of Norway on the oil sector.
Any drop in world oil prices will unavoidably affect the value of the Norwegian currency itself, and, conversely, any increase will contribute to the growth of the country's economy.
Another factor affecting the Norwegian economy is unrest in the international financial market. Since the krone is considered a peripheral currency when there is high volatility in the market many international traders reduce the number of krones traded, which leads to a depreciation of the currency.
The Australian currency, on the contrary, is among the top 5 most traded assets in the world. Therefore, this pair is rarely chosen by novice traders.
Although the commodity factor in Australia's economy does play an important role, it can be assumed that the price of gold could drop as sharply as oil would be unreasonable.
In such a situation, AUD will always be in a winning position against NOK, except for moments of sharp spikes in oil prices and sinking of the Southeast countries’ economies, primarily China and Japan. The situation in the United States may also affect the Australian dollar.
These countries are Australia's largest trading partners, so any changes in the political or business environment will weaken the AUD. Against this background, NOK, especially supported by a good oil price, will show good results.
In practice, such situations, although they do occur, are not too common. Understanding the topic will be easier for those traders who have rich experience in commodity trading. But even for them the topic will be difficult and will require the implementation of painstaking fundamental analysis and preparation of a strategy for several months in advance.