Strong Swedish production data points to a rebound in Q4 GDP

Ed Moya MarketPulse

The Swedish krona rallied against euro after posting a strong rebound in orders for the month October. Private sector production on an annual basis came in at 4.6%, better than the analysts’ consensus of 2.0%. Total orders in industry rose by 1.0% in October 2018 compared with September, in seasonally adjusted figures. Compared with October 2017, total orders in industry surged by 3.1% in calendar adjusted figures. Among the industrial subsectors, the largest increase was in the other transport equipment industry, up 64.6 percent compared with September.

The PMI data readings for November have also been strong, Monday saw the manufacturing reading beat expectations at 56.7 and earlier this morning the services PMI reading improved from 56.4 to 62.2.

The recent positive prints are pointing to a rebound in GDP for the fourth quarter. On November 30^th, third quarter GDP declined 0.2%, posing difficulty for the Riksbank who is considering tightening. Sweden’s central bank has been very clear they are considering a rate rise at either the December or February meeting. If we see slower growth globally, we may start to see all major economies shift to a wait and see mode regarding tightening. Domestically, unemployment is expected to rise, inflation has not been too strong, the krona is expected to rebound, and private debt is at record levels. With growing uncertainties on the domestic economy, the Riksbank may adopt a more wait and see mode on tightening.

Price action on the EUR/SEK daily chart shows that the recent move lower stemmed from the death cross formation at the beginning of the month. If we continue to see weakness, price might not find support until the 10.124. It is around that area that we could see a bullish Butterfly pattern. Point D is targeted with the 200% Fibonacci expansion level of the X to A leg and the 161.8% Fibonacci expansion level of the B to C move. If valid, we could see a rebound towards the 10.2500 region. If the pattern is invalidated, the next key support level would come from the June low of 10.0945.

Author

Ed Moya

MarketPulse

With more than 20 years’ trading experience, Ed Moya is a market analyst with OANDA, producing up-to-the-minute fundamental analysis of geo-political events and monetary policies in the US, Europe, the Middle East and North Africa.

EUR/USD flirts with daily highs, retargets 1.1900

EUR/USD regains upside traction, returning to the 1.1880 zone and refocusing its attention to the key 1.1900 barrier. The pair’s slight gains comes against the backdrop of a humble decline in the US Dollar as investors continue to assess the latest US CPI readings and the potential Fed’s rate path.

GBP/USD remains well bid around 1.3650

GBP/USD maintains its upside momentum in place, hovering around daily highs near 1.3650 and setting aside part of the recent three-day drop. Cable’s improved sentiment comes on the back of the Greenback’s irresolute price action, while recent hawkish comments from the BoE’s Pill also collaborate with the uptick.

Gold clings to gains just above $5,000/oz

Gold is reclaiming part of the ground lost on Wednesday’s marked decline, as bargain-hunters keep piling up and lifting prices past the key $5,000 per troy ounce. The precious metal’s move higher is also underpinned by the slight pullback in the US Dollar and declining US Treasury yields across the curve.

Crypto Today: Bitcoin, Ethereum, XRP in choppy price action, weighed down by falling institutional interest

Bitcoin's upside remains largely constrained amid weak technicals and declining institutional interest. Ethereum trades sideways above $1,900 support with the upside capped below $2,000 amid ETF outflows.

Week ahead – Data blitz, Fed Minutes and RBNZ decision in the spotlight

US GDP and PCE inflation are main highlights, plus the Fed minutes. UK and Japan have busy calendars too with focus on CPI. Flash PMIs for February will also be doing the rounds. RBNZ meets, is unlikely to follow RBA’s hawkish path.

Ripple Price Forecast: XRP potential bottom could be in sight

Ripple edges up above the intraday low of $1.35 at the time of writing on Friday amid mixed price actions across the crypto market. The remittance token failed to hold support at $1.40 the previous day, reflecting risk-off sentiment amid a decline in retail and institutional sentiment.