Norwegian crown hits 7-week high on inflation data

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The Norwegian crown soared to a seven-week high against the euro on Monday after Norway reported consumer inflation unexpectedly jumped in July, as investors trimmed expectations that the central bank would cut interest rates.

The crown surged around 1 percent against the euro after the data amid high trading volumes, rising above 8.28 crowns per euro. That was its strongest since June 19, when the currency dived after the Norges Bank hinted at a possible rate cut if the economy weakened.

Monday's data, showing Norway's core inflation rising above the Norges Bank's long-term target to 2.6 percent in July, prompted investors to start pricing out the risk that rates would be cut.


The Norwegian crown's gains also helped push its Swedish counterpart higher on Monday, hitting a 12-day peak below 9.19 crowns per euro, up 0.5 percent on the day.

The Scandinavian moves - easily the biggest in developed currency markets - took the focus away from a broader shift to riskier plays, which saw the yen backing off from the highs it reached last week, when fighting in Ukraine and Gaza fueled demand for the safe-haven Japanese currency.

The dollar was over half a percent above a two-week trough above 101 that it had hit on Friday. It initially rebounded late last week on news that Russia was ending military drills near the Ukrainian border, helping U.S. stocks post their best one-day gain since March.

The was flat below 137 yen, around 0.8 percent above an 8 1/2-month low hit on Friday.

In an overview of the years since the financial crisis, U.S. Federal Reserve Vice Chair Stanley Fischer said the U.S. and global recoveries have been "disappointing" so far.

Some thought Fischer would adopt a more hawkish tone after a run of more robust U.S. data. But despite a strong rebound in the second quarter, the U.S. growth for July-September remains uncertain.

—By Reuters