EUR/SEK keeps the bid tone around 10.6000
|- The cross remains close to YTD peaks beyond 10.6000.
- Riksbank minutes showed members remain optimistic on outlook.
- Riksbank Ingves talked down recent poor CPI figures.
Another day, another drop in the Swedish Krona. EUR/SEK is extending the rally so far this week and is now navigating in the middle of the daily range around the 10.6000 mark.
EUR/SEK now targets 10.7290, 2018 highs
The cross is advancing since Tuesday, when disappointing inflation figures for the month of January sparked a wave of selling bias in the Swedish Krona that lifted the cross to fresh YTD peaks beyond 10.6300 the figure (February 21).
Today, the publication of the Riksbank minutes left no room for surprises, noting that board members remain quite optimistic on the outlook for the Scandinavian economy and still leaving the door open for a rate hike in the second half of the current year.
Later, Governor Ingves talked down the recent lower inflation expectations, while he stressed that consumer prices are expected to gyrate around the 2% target and SEK should start picking up pace. Furthermore, member af Jochnick said the central bank should stay vigilant of developments in overseas economies while member Floden did not rule out a rate hike in April if SEK stays weak and inflation gathers traction.
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. Additionally, concerns over the global slowdown and the ‘wait-and-see’ mode from the ECB should prompt some caution in the Riksbank, despite recently published minutes suggested a rate hike this year remains well on the table.
EUR/SEK levels to consider
As of writing the cross is up 0.10% at 10.6086 and a break above 10.6314 (2019 high Feb.21) 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 10.5141 (10-day SMA) seconded by 10.4520 (21-day SMA) and then 10.4036 (low Feb.13).
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