Norwegian Krone Sparkles With Oil

NEW YORK ( TheStreet) -- Although the euro was the center of attention for most the trading day, the Norwegian krone was one of the biggest currency winners Thursday driven by growing interest rate chatter, positive retail sales numbers and a rebound in oil prices.

The euro was gaining 0.3% against the dollar at $1.41683, but falling 0.5% against the krone at NOK 7.83390. The Norwegian krone popped 0.9% against the dollar at $0.18085.

Norwegian retail sales grew at the fastest clip in three months in February, driven by low lending rates and an improving employment picture. Retail sales excluding gas and autos gained 2.7% in February from a year ago compared with an increase of 0.4% in January.

There is now talk that Norway's central bank, the NorgesBank, could lift interest rates soon.

"From what I'm seeing, market participants are attributing the strength in the Norwegian krone following the upbeat data out of the region (the rise in retail sales), but it seems as though interest rate expectations for the NorgesBank are gathering pace as the European Central Bank prepares to lift its benchmark interest rate for the first time since the financial crisis," said DailyFX currency analyst David Song.

Norway's central bank policymakers are expected to decide on interest rates at their May 12 meeting.

"At the same time, the rebound in market sentiment also appears to be fueling demands for the krone as investors raise their appetite for risk," said Song.

The krone's ascent Thursday was accompanied by a rebound in oil prices, which spiked 2.3% to $106.65 a barrel. Light sweet crude oil for May delivery ended the previous trading session 0.5% in negative territory and the quarter up 14%. The krone and oil prices have a strong correlation given that Norway is the fifth largest international oil exporter and a leading gas exporter in Western Europe.

Oil stocks finished Friday's trading session in mixed territory.

Holly Energy Partners ( HEP) finished 1.2% higher at $58, TransMontaigne Partners ( TLP) rose 0.9% to $36.33, Sunoco Logistics Partners ( SXL) added 0.5% to $86.78, BP ( BP) fell 1% to $44.14, Chevron ( CVX) rose 0.5% to $107.49, Total S.A. ( TOT) rose 0.4% to $60.97 and Marathon Oil ( MRO) increased 0.7% to $53.31.

On Thursday, the euro strengthened against the dollar as inflation readings crept up faster than expected in March, sparking the notion that near-term interest rate hikes in the eurozone region was inevitable. The region's Eurostat office said consumer prices in 17 eurozone countries increased 2.6% year-over-year in March, up from 2.4% in February.

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-- Written by Andrea Tse in New York.

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