Swedish Central Bank Very Upbeat in Monetary Policy Statement; SEK Bid

OVERVIEW – It is no wonder why the krona was amongst the strongest currencies on the day in Thursday trade, with the Riksbank raising rates by 25bps and accompanying the decision with some rather upbeat language. Comments like the economy continues to show “strong growth” and the labor markets have improved “substantially” were very well received by investors and it seems as though Sweden bulls are becoming less concerned with any weakness in the US economy and the potential ripple effect on the local economy. The NOK also was a strong gainer on Thursday, in fact even outpacing the SEK, but the currency is at risk for some more volatility today as the unemployment rate is set for release at 7:00GMT.

Eur/SekHas broken to yet another yearly low by 9.30, and a fresh lower top is now confirmed by 9.53 ahead of the next downside extension which exposes a test of next key psychological barriers by 9.25. Daily studies are however looking stretched, but a break back above 9.53 would be required at a minimum to delay the current structure.

Eur/Nok Overall price action remains quite choppy with the market most recently stalling out ahead of the multi-day range lows by 7.80 and bouncing back into the mid-range. From here, look for additional upside to test the range highs over the coming days which come in by 8.20. Look for a break back above the 8 handle to confirm and accelerate. Below 7.80 delays.

Usd/SekThe market has been locked in some choppy sideways trade over the past several days since rallying sharply after stalling out ahead of the 7 handle, and from here it is difficult to determine whether we are in the process of carving out a higher low above 7.04, or a lower top by 7.51 ahead of the next drop. As such, look for a close back above 7.51 or below 7.20 for clearer directional bias.

USD/NOK DAILY

Bloomberg

Usd/Nok The cross looks to have carved out a meaningful base ahead of 5.90, following the latest surge back above 6.20. From here it is difficult to determine whether or not the rally will continue, with the downtrend from June still intact and the market potentially looking to carve a fresh lower top below 6.40. As such, we would need to see a break back above 6.37 to encourage an official shift in the structure and open some fresh upside.

Gbp/NokThe market has been well capped by some solid range resistance just over 9.80 to result in the latest minor pullback. However, the overall structure remains quite bullish with the cross trending higher over the past few months, and we would expect to see any setbacks well supported ahead of 9.40. A break and close back above 9.82 would also confirm bullish bias and accelerate gains.

Nok/JpyDespite the latest break to fresh 2010 lows below multi-week range support by 13.50, the overall price action still remains quite consolidative in the 13-14.50 area and our recommendation is to continue to play the range high lows.

Written by Joel Kruger, Technical Currency Strategist for DailyFX.com

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