- SEK gives away part of initial gains, remains bid.
- EUR/SEK keeps fading the advance to YTD peaks.
- Sweden Consumer Confidence dropped to 91.0 in May.
EUR/SEK dropped and tested the area of 3-week lows in the 10.6700 region earlier in the day, although it has managed to pick up some pace soon afterwards.
EUR/SEK weaker post-data
The cross has resumed the downside following Monday’s positive session, extending the broader correction lower after being rejected from 2019 highs in the boundaries of the 10.8500 handle recorded earlier in the month.
Today, SEK, gained traction after Consumer Inflation Expectations in Sweden rose 3.6% for the current month (from 3.4%) and despite Business Confidence and Consumer Confidence came in below estimates for the same period at 101.8 and 91.0, respectively.
In addition, April’s trade surplus shrunk to SEK 1.4 billion and Household Lending Growth expanded at an annualized 5.0% during the same period.
Tomorrow, all the attention will be on the publication of the GDP figures for the January-March period, a critical release for the Riksbank ahead of the upcoming monetary policy meeting.
What to look for around SEK
The Krona has been appreciating for the last two weeks after recording yearly lows near 10.8500 the figure earlier in May. However, the pass through of the strong depreciation of the currency to consumer prices remains slow to say the least and in spite of April’s higher-than-expected inflation figures. That said, the case for another rate hike by the Scandinavian central bank still remains on the table for the time being and could come at some point by end-2019 or early 2020. This idea, however, is in direct conflict with the ‘neutral for longer’ stance now expected from the ECB, as it is well known that the Riksbank is likely to move in tandem with its European peer.
EUR/SEK levels to consider
As of writing the cross is losing 0.26% at 10.6915 and faces the next support at 10.6730 (low May 28) followed by 10.6476 (high Mar.8) and finally 10.5670 (55-day SMA). On the flip side, a break above 10.7387 (10-day SMA) would aim for 10.8498 (2019 high May 13) and then 11.1167 (monthly high July 2009).
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