- The Krona depreciates to multi-month lows vs. EUR.
- Upside in NOK/SEK also helps the up move in the cross.
- Manufacturing PMI in Sweden due tomorrow.
The Swedish krona depreciates further vs. its European peer on Wednesday, lifting EUR/SEK to fresh 2019 peaks in the vicinity of the 10.6800 handle.
EUR/SEK now targets 2018 highs at 10.7290
The increasing selling mood in the Swedish currency remains the name of the game around the cross for the time being, which has now advanced to the area last traded in August 2018 near the 10.6800 milestone.
SEK has regained downside pressure particularly after the Riksbank left its monetary policy unchanged at its meeting last week. Despite efforts from Riksbank’s officials to remove pressure on the Krona and rhetoric over a potential rate hike at some point by year-end, investors appear sceptical over this scenario amidst the persistent lack of convincing traction in domestic consumer prices.
Also adding to SEK weakness, NOK/SEK has resumed the upside and is flirting with yearly tops, as market participants continue to favour the Norwegian economy when comes to assess fundamentals vs. its Scandinavian neighbour.
Later in the session, the Swedish manufacturing PMI will be the only release of note this week.
What to look for around SEK
Sluggish inflation figures in the Nordic economy coupled with the absence of upside traction in wages have been undermining hopes of reaching the Riksbank’s target despite the sharp depreciation of the Krona in past months. The Riksbank still keeps a rate hike on the table by year-end or early 2020 in spite of increasing skepticism among investors, particularly against the backdrop of the ‘neutral for longer’ stance now expected from the ECB, in line with the majority of its G10 peers.
EUR/SEK levels to consider
As of writing the cross is up 0.37% at 10.6702 and faces the next hurdle at 10.6768 (2019 high May 1) seconded by 10.6929 (monthly high May 3 2018) and then 10.7290 (2018 high Aug.29). On the flip side, a break below 10.5534 (10-day SMA) would expose 10.4973 (55-day SMA) and finally 10.3769 (low Apr.1).
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