This chart below doesn't need much explaining. The Norwegian Krone is moving in in-line with the oil price, which is heading north, while EURNOK is on its way south.

Norway is the world's tenth largest oil producer, and, crucially, it has a deeply stable political system. Thus, while the political crisis in the Middle East continues to rage and burn this should spur further Krone appreciation for two reasons:

1, The Mid East tension is pushing up the oil price, good news for Norway's terms of trade and economic fundamentals.

2, It also makers Norway an attractive place to rely on for your oil supplies, which should boost flows into the Nokkie for the medium to long term. .

EURNOK (orange line) and Brent crude oil (generic contract)

width=630

Yield could also turn supportive for the NOK:

Norway is one of the chief beneficiaries of the Middle East crisis, and the positive economic impact should ensure monetary policy tightening in the coming months from the Bank of Norway - another positive for the NOK.

Norway's trade balance surged in 2008 when oil prices reached $140 per barrel, back then the Bank of Norway was on a tightening cycle. The trade balance and rates tend to peak together albeit with a slight lag. Recently we have seen Norway's trade balance surge, but rates have been static since May last year. With history as a guide, a further increase in Norway's trade surplus could precipitate a rate hike in the near future. This is NOK supportive, and we think, bar a collapse in the price of crude, the NOK should continue to be a top performer out of the G10 currencies.

width=630

Don't forget that you can now follow Forex.com's research team on Twitter: http://twitter.com/forexresearch

Best Regards,

Kathleen Brooks| Research Director UK EMEA | FOREX.com

d: +44.(0).20.7398 5024 | f: +44.(0).20.7929.2010 | M: +44 (0) 7919422957 | e: kbrooks@forex.com| w: www.forex.com/uk

12 Camomile Street | 9th Floor | London EC3A 7PT

Now you can follow us on Twitter: http://twitter.com/forexresearch

Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Authorised & Regulated by the Financial Services Authority

Forex and other leveraged trading can involve significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary. This email contains confidential information belonging to FOREX.com and is intended solely for the addressees. The unauthorised disclosure, use, dissemination or copying (either whole or partial) of this email, or any information it contains, is prohibited. FOREX.com assumes no responsibility for errors, inaccuracies, or omissions in these materials. FOREX.com does not warrant the accuracy or completeness of the information, text, graphics, links or other items contained within these materials. We respect your privacy. Email addresses are not released to third parties.

FOREX.com UK a trading name of GAIN Capital - FOREX.com UK Limited and is authorised and regulated by the FInancial Services Authority. FSA No. 190864.