- SEK regains some shine after Tuesday’s 2019 lows vs. EUR.
- Inflation expectations ticked lower in February.
- GDP forecasts revised lower by the Swedish Debt Office.
The beleaguered Swedish Krona is finding some oxygen on Wednesday after EUR/SEK recorded fresh 2019 highs at 10.6219 yesterday.
EUR/SEK stays weak, uncertainty prevails
SEK depreciated to fresh yearly lows on Tuesday, lifting the cross to levels last seen in late August 2018 beyond the 10.62 handle, all in response to poor prints from inflation figures during January.
Speaking about inflation, today’s Kantar Sifo Prospera survey notes money market players’ inflation expectations receded a tad for the 5-year term horizon. In addition, GDP is now seen expanding 1.7% in a year’s time (from 1.9%) vs. unchanged figures for the scenario within 2 years (1.8%) and 5 years (2.0%).
Furthermore, the Swedish Debt Office released its forecasts for GDP. The agency revised lower its prospects and is now seeing the economy expanding 1.6% this year (from 1.9%) and 1.6% in 2020 (from 1.8%).
What to look for around SEK
Fundamentals in the Scandinavian economy remain healthy, although the projected global (and particularly the EMU) slowdown is expected to have its say on the performance of the domestic economy in the next months. If we add the recent forecasts for lower GDP, the outlook on the Krona appears cloudy, to say the least. In addition, SEK is also facing extra headwinds as market participants consider it a funding currency when comes to carry trade. Following the ‘dovish’ hike in December and subsequent messages from the central bank in the same direction, one can assume that a fairly amount of negative news should be already priced in around the Krona. However, concerns over the global slowdown and the ‘wait-and-see’ mode from the ECB should prompt some caution in the Riksbank, pouring cold water over speculations of further tightening this year and thus fuelling further bouts of SEK weakness.
EUR/SEK levels to consider
As of writing the cross is up 0.08% at 10.5620 and a break above 10.6217 (2019 high Feb.19) would open the door to 10.6929 (high May 4 2018) and finally 10.7290 (2018 high Aug.29). On the flip side, the next support aligns at 10.4926 (10-day SMA) seconded by 10.4192 (21-day SMA) and then 10.4036 (low Feb.13).
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD clings to recovery gains near 1.0650
EUR/USD trades in positive territory near 1.0650 on Wednesday. The US Dollar sees a modest retreat, helping the pair recover previous losses. The EUR/USD rebound, however, appears limited amid Fed-ECB policy divergence. ECB and Fed speeches eyed.
GBP/USD holds above 1.2450 after UK inflation data
GBP/USD is holding onto the latest upside above 1.2450 in the European session on Wednesday. The UK's ONS reported that the annual inflation edged lower to 3.2% in March. This reading beat the market expectation of 3.1% and helped Pound Sterling stay afloat.
Gold fluctuates near $2,390 as markets keep an eye on geopolitics
Gold trades in a relatively tight range near $2,390 in the second half of the day on Wednesday. In the absence of high-tier data releases, investors keep a close eye on headlines surrounding Iran-Israel conflict.
XRP tests $0.50 resistance after Ripple CLO clarifies that no pretrial conference took place with SEC
XRP is stuck below $0.50 resistance after failing to close above this level since Monday. Ripple CLO Stuart Alderoty said late Tuesday there was no pretrial conference since the SEC dropped charges against executives.
World economy: To cut or not to cut (simultaneously)?
US inflation March figure, again higher than expected, put an end to the scenario of a simultaneous first rate cut by the Fed, the ECB, and the BoE in June.