What is AUD/NOK?
The AUD/NOK forex trading pair represents the exchange rate between the Australian dollar (AUD) and the Norwegian krone (NOK), or the number of NOK required to purchase one AUD. Despite the fact that it involves two strong economies, the currency pair is regarded as "exotic." Although AUD/NOK is not as regularly traded as major currency pairs such as EUR/USD or USD/JPY, it does offer opportunities for traders seeking exposure to these two currencies.
What affects the price of the AUD/NOK pair?
The price of commodities has a significant impact on the AUD/NOK pair. Because both nations are large exporters, particularly Norway, which is a major oil producer, variations in the price of oil can have a substantial impact on the Norwegian krone's value.
Iron ore, coal, and natural gas are all exported from Australia. As a result, fluctuations in commodity prices can have an impact on the value of the AUD, which is also regarded as a commodity dollar in forex. For example, if the price of coal rises, demand for AUD increases, making its value rise relative to NOK.
The Reserve Bank of Australia's and Norges Bank's monetary policies have a significant impact on their respective currencies. For example, if Norges Bank hikes interest rates while the Reserve Bank of Australia holds rates stable, investors may shift their money into Norwegian krone-denominated assets, increasing demand for NOK and causing its value to rise compared to AUD.
What to watch out for when trading AUD/NOK?
When trading the AUD/NOK currency pair, pay close attention to commodity prices and any news related to oil production or exports from Norway or Australia. It is also critical to monitor announcements from the key influential bodies in the two countries. These include:
- Reserve Bank of Australia (RBA) and Norges Bank for Interest Rates and policy decisions
- Australian Bureau of Statistics (ABS) and Statistics Norway for data on Trade Balance, wages, Unemployment Rate, Consumer Price Index (CPI), and Gross Domestic Product (GDP)
Finally, keep in mind when trading AUD/NOK that this currency pair may not be as liquid as some of the major pairs. This means that there may be wider bid-ask spreads and less volume overall, which can make it more difficult to enter or exit trades quickly.