The USD/NOK currency pair hovered above a one-week low of 9.9995 on Tuesday, as the greenback was weighed down by dovish remarks by a key Federal Reserve official, which bolstered investor rate cut optimism.
Yesterday Minneapolis Fed President Neel Kashkari said that inflation was slowly cooling, but there was a risk the unemployment rate could “pop” higher. This would add to prospects of an interest rate cut.
Market focus now sets on the US data string, including ADP employment figures, job openings as well as Friday’s Non-Farm Payrolls report for December, which may provide more clues on the health of the economy and the Fed’s monetary policy trajectory.
Last month, FOMC policy makers had signaled just one 25 bps rate cut for 2026, while investors continue to expect two or three rate cuts of 25 basis points each.
In addition, the impact on currencies of the US military operation in Venezuela over the weekend seemed to have been short-lived, with market sentiment improving.
“A little over 48 hours after the U.S. military operation in Venezuela, there are few marks left in the currency market. Early Monday’s flight into dollar safety proved very short-lived,” Francesco Pesole, FX analyst at ING, was quoted as saying by Reuters.
“The good performance of equities yesterday, despite geopolitical risk, was, in our view, the primary driver of the unwinding of earlier dollar gains,” Pesole said.
The USD/NOK currency pair was last up 0.21% on the day to trade at 10.0472.
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