SEK, NOK Forecast: European GDP, US Data May Pressure Nordics
NORDIC FX, NOK, SEK WEEKLY OUTLOOK
- NOK, SEK bite nails before European GDP
- German growth is a major point of concern
- Why does EU demand matter for NOK, SEK?
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The Swedish Krona and Norwegian Krone may find themselves feeling tense in today’s trading session as Eurozone, French and Italian GDP are released along with a slew of key growth indicators out of Germany. Economic reports have been broadly falling short of expectations, indicating that perhaps analysts are too optimistic about the Continent’s growth – or there lack of.
70 percent of Sweden’s exports head to Europe, of which 11 percent is consumed by Germany. This might help explain why Riksbank Deputy Governor Martin Floden expressed concern about slower growth from the “steam engine of Europe”. Deceleration in the largest Eurozone economy has broader regional implications. It inevitably spills over into other Eurozone member states that rely on strong demand out of Germany.
The nature of inter-European demand is also a point of concern for Norway. 80 percent of Norway’s exports have Europe as their destination. 52 percent of those goods are linked to petroleum-based products. This leaves the Norwegian economy sensitive to changes in European demand due to the country’s reliance on a cycle-sensitive commodity. This explains why Nordic policymakers are so concerned with European growth.
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For this reason, today’s release of key growth indicators – and the potential volatility it may stoke – is a point of concern for Swedish Krona and Norwegian Krone traders. The outlook for European demand could impact the central bank’s monetary policy out of Sweden and Norway if inflationary pressure in the EU continues to cool and sends a chilly breeze into the Nordic economies.
US economic data will also heavily eyed by Nordic traders because of the global impact US economic activity has on the world economy. Swedish Krona and Norwegian Krone traders with exposure to a US-Dollar cross will be particularly mindful, given that the source of the event risk is emanating from the base currency’s home. Looking to trade NOK, SEK? Sign up for my Nordic trading webinar here!
CHART OF THE DAY: GDP FROM TOP THREE EUROZONE ECONOMIES
KRONA, NORWEGIAN KRONE TRADING RESOURCES
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--- Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com
To contact Dimitri, use the comments section below or @ZabelinDimitrion Twitter
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.