EUR/NOK settles above 7-week low, posts weekly loss
The EUR/NOK currency pair settled above Friday’s low of 11.4451, its weakest level since April 4th, after Euro Area’s negotiated wage growth slowed markedly in Q1, supporting the case for further ECB
The EUR/NOK currency pair settled above Friday’s low of 11.4451, its weakest level since April 4th, after Euro Area’s negotiated wage growth slowed markedly in Q1, supporting the case for further ECB interest rate cuts.
Additional pressure on the Euro came after fresh US tariff threats.
New ECB data showed negotiated wages in the Euro Area rose 2.38% year-on-year in the first quarter of 2025. It has been the smallest YoY increase since Q4 of 2021 and followed a 4.12% YoY growth in Q4 of 2024. The data aligned with the European Central Bank’s view that wage-driven inflation pressures were diminishing.
Markets have priced in an increased chance that the European Central Bank would lower interest rates next month.
In other data, Germany’s private sector went back into contraction territory in May, weighed down by a sharper downturn in services activity that offset manufacturing’s modest rebound.
According to flash estimates from S&P Global and Hamburg Commercial Bank, the HCOB Flash Germany Composite PMI Output Index declined to 48.6 in May, 1.5 lower than April’s 50.1 and below the anticipated 50.4.
Meanwhile, Germany’s Ifo Business Climate indicator rose to 11-month high in May, at 87.5 and against estimates of 87.4.
Finally, Germany’s quarterly GDP growth has now been revised up to 0.4% in Q1 of 2025 from 0.2% in the initial estimate.
On the trade front, US President Donald Trump said on Friday that he was recommending a flat 50% tariff on all products imported from the European Union, effective June 1st. Trump also stated that discussions with the European Union were “going nowhere.”
The announcement reignited investor concerns over the impact of tariffs on global economy.
Elsewhere, Norway’s economy contracted 0.1% quarter-on-quarter in Q1 of 2025, after a revised down 0.9% decline in the preceding quarter.
The Norwegian Krone has received a boost from rising oil prices after a CNN report that Israel is planning a strike on Iranian nuclear sites.
The EUR/NOK currency pair settled 0.17% lower at 11.4767 on Friday.
The exotic Forex pair lost 0.90% for the week – its sixth straight weekly decline.
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