- The Swedish currency depreciated to fresh yearly lows today.
- Riksbank Ingves said the central bank does target the Krona.
- SWE manufacturing PMI disappointed forecasts in April.
Another day, another negative performance of the Krona. Reflecting this, EUR/SEK climbed to fresh 2019 highs beyond the 10.7000 handle earlier in the session, although losing some momentum soon afterwards.
EUR/SEK higher post-PMI
The selling pressure in the Krona remains everything but abated so far this week, forcing the cross to break above the psychological 10.70 handle for the first time since August 2018.
Further weakness around the Scandinavian currency came after Sweden’s manufacturing PMI came in at 50.9 for the month of April, a tad below forecasts and lower than March’s 52.5 (revised from 52.8).
Earlier in the session, Riksbank Governor Ingves reiterated the central bank does not target the currency, while Deputy Governor Jansson noted inflation expectations remain subdued, probably reflecting the lack of traction in wage growth.
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 0.06% at 10.6798 and faces the next hurdle at 10.7049 (2019 high May 2) seconded by 10.7290 (2018 high Aug.29) and then 1.1167 (monthly high July 2009). On the flip side, a break below 10.5997 (78.6% Fibo of the 2018 drop) would expose 10.5007 (55-day SMA) and finally 10.3769 (low Apr.1).
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