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SEK TALKING POINTS – SWEDEN CPI, USD/SEK, FOMC MEETING MINUTES

  • The Swedish Krona may be vulnerable if CPI data undershoots
  • USD/SEK traders will likely be eyeing the FOMC meeting minutes
  • Riksbank Governor Martin Floden will be speaking on Wednesday

See our free guide to learn how to use economic news in your trading strategy!

The Swedish Krona may move away from the December 2016 highs if CPI data surpasses expectations. Forecasts for month-on-month inflation data are currently pegged at -0.7 percent, with the previous at 0.4 percent. Year-on-year price data has substantially risen since 2015 but has recently plateaued after some significant dips in 2018.

Despite price data hovering around the Riksbank’s inflation target, there is doubt about whether Sweden’s underlying economic activity can support upward momentum in the face of domestic and international risks. Some local concerns include household indebtedness and international issues such as Brexit, trade wars and the more recent phenomenon of slower-than-expected growth in Europe.

Looking ahead, Swedish Krona traders will likely be waiting to hear Riksbank Governor Martin Floden speak in Stockholm on Wednesday on monetary policy. Those trading SEK against the US Dollar will almost certainly be monitoring the release of the FOMC meeting minutes on the same day. Reasons behind the Fed’s dovish U-turn may drive the export-driven Krona lower if fears of slower growth are cited as a leading cause.

Next week – as outlined in the Nordic fundamental outlook – SEK traders will likely be keeping a close eye on Sweden’s GDP, PPI, retail sales and manufacturing PMI data. In the face of slower growth and risk from abroad, watching these indicators will be a prudent approach to formulating a well-informed trading strategy.

USD/SEK in the meantime is still trading at a three-year high just below a key resistance at 9.3110. The pair has lost some steam – as expected – after it entered overbought territory and appears to be coming down from a sugar high. Depending on the content of the FOMC meeting minutes and CPI results, USD/SEK could retest the 9.3110 resistance, opening up the door for potentially substantial upward strides.

USD/SEK – Daily Chart

Chart Showing USD/SEK

USD/SEK TRADING RESOURCES

--- Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com

To contact Dimitri, use the comments section below or @ZabelinDimitrion Twitter