Looking for a Job? Move to Norway
Norway's currency the krone rallied on Tuesday, appreciating roughly 0.60% against the U.S. dollar. The krone rose against the dollar after a report showed that unemployment in Norway declined more than anticipated, according to Bloomberg.
Norway's unemployment rate is 2.5%, highlighting what is perhaps a booming economy.
The central bank of Norway might consider raising rates on the news, to prevent wage growth from triggering run-away inflation in the Northern European economy.
Norway exports a significant amount of oil. The recent bull-run in oil may be the cause of Norway's economic growth.
If the price of oil remains high, the Norwegian economy might continue to strengthen. That could be bullish for the krone, which might continue to rally, even if the Bank of Norway tightens its policy.
However, if oil prices stabilize or recede, the Norwegian economy may weaken, and the krone may follow suite.
Bullish: Traders who believe that oil prices will continue to rise and the Norwegian economy will strengthen might want to consider the following trades:
- United States Oil Fund (NYSE: USO) is a long play on the price of oil. USO may do well if oil continues to increase in price.
- Statoil ASA (NYSE: STO) is an energy company based in Norway and may benefit from an increase in the price of oil and a booming Norwegian economy.
Bearish: Traders who believe that oil prices will recede and the Norwegian economy will weaken may consider taking positions in the following:
- United States Short Oil Fund (NYSE: DNO) is a short play on oil. DNO may rally if oil declines in price.
- WisdomTree Dreyfus Euro ETF (NYSE: EU) is a long play on the euro. If the krone declines, European traders may shift their holdings to the euro.
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