- Upside in EUR/SEK picks up pace and tests 10.70.
- Sweden Retail Sales disappointed in August.
- Riksbank still sees a rate hike by year-end, early 2020.
The Swedish Krona is losing further momentum at the end of the week and is lifting EUR/SEK to the area of 3-day highs around 10.70.
EUR/SEK up after data, in multi-day highs
The cross keeps the choppy trade so far this week and remains well within the rangebound theme prevailing since early September and following YTD peaks just above 10.85 recorded on August 30.
SEK lost further ground today after Retail Sales came in flat on a monthly basis in August and expanded 2.7% from a year earlier, both prints coming in below expectations.
The poor data add to the downtick in August’s Producer Prices and the drop in Consumer Confidence for the current month.
What to look for around SEK
Despite the Riksbank kept the repo rate unchanged at -0.25% at its meeting earlier this month, it did sounded quite optimistic on a potential rate hike at some point by year-end or early 2020. Domestic fundamentals remain healthy overall in spite of the recent uptick in the unemployment rate and with inflation running close to the bank’s target. In addition, SEK remains the worst performing currency so far this year and its weakness should play against any additional rate cuts. The main threats for a small and open economy like the Swedish one comes from the unabated concerns on the US-China protracted trade war and its impact on global growth prospects.
EUR/SEK levels to consider
As of writing the cross is advancing 0.35% at 10.6985 and a breakout of 10.7563 (high Sep.19) would expose 10.8373 (high Aug.7) and then 10.8498 (2019 high May 13). On the flip side, the next support is located at 10.6399 (low Sep.25) seconded by 10.6099 (monthly low Sep.6) and finally 10.6019 (low Aug.14).
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