SEK: Has it troughed? - Rabobank

Following an extended period of weakness, the SEK appears to have found its feet as over the past few sessions, it has launched a turnaround and is currently the second best performing G10 currency on a 5 day view after the JPY, explains Jane Foley, Senior FX Strategist at Rabobank.

Key Quotes

“EUR/SEK is currently testing technical support.  A break below could increase downside momentum for the currency pair.”

“This morning the release of the minutes of the April Riksbank policy meeting has provided a catalyst for further gains in the SEK.  Not only do the minutes show that one policymaker does not want to rule out a September rate hike, but they also show repeated mentions of the weak SEK, indicating that the currency’s recent downtrend could be making the central bank anxious.”

“The press release that followed the April 25 Riksbank policy meeting announced that policy rates will “begin to be raised towards the end of the year, which is somewhat later than previously forecast”. As a result the uptrend in EUR/SEK was given another boost.”

“From a technical perspective EUR/SEK is currently positioned at an important pivot at the 10.48 area. A more important support lies in the 10.35 area.  A break below here could see the move gaining momentum.  The next key focus for the SEK will be tomorrow’s release of Swedish April CPI data.  The market expects price pressure to remains moderate with the CPIF inflation rate expected to soften to 1.9% y/y in April from 2.0% y/y in March according to consensus forecasts.  Any upside surprise on inflation could accelerate the pace of the recovery in the SEK.”