Last week, Riksbank Governor Stefan Ingves told Bloomberg that the low interest-rate environment is adding to “increased risk taking” and therefore poses a threat to financial stability. A big part of the problem, he added, is global financial conditions. Earlier today, Sweden’s PPI (MoM) for October was released at 0.4% vs 0.2% forecast. Riksbank’s Skingsley added today that one single data point is not decisive for December (Risksbank Rate Decision meeting), and you can raise rates when inflation is under target if it looks like we will get back to target.” Expectations are currently for the Riksbank to leave rates on hold at -0.25%, however there is still plenty of data to be released before the December 19th meeting, including Business and Consumer Confidence and Retail Sales this week, and Manufacturing PMI early next week.
USD/SEK has been trading in an ascending channel since the end of 2018, and currently is testing the bottom trendline looking for a break. Price closed just below the rising trendline at 9.5848. One possible reason USD/SEK has been trading lower since early October is that traders may now be looking for a possible surprise and the next Meeting, or at the very least, a hawkish statement.
Source: Tradingview, City Index
On a 240-minute timeframe, USD/SEK broke a shorter term trendline as well today near 9.60. If price breaks below the 61.8% retracement level from the lows on July 19th to the highs on October 9th at 9.5574, it has room to run down to horizontal support near 9.50. The next support level is the July 19th low at 9.3050. Resistance is so close to currently levels at 9.6000, and above that at a series of recent highs near 9.6500. Above that is the downward sloping trendline from October 19th near 9.7000.
Source: Tradingview, City Index
Data over the next week from Sweden will be extremely important in determining the direction of USD/SEK over the short term as traders and investors position themselves ahead of the December 19th Risksbank Rate Decision Meeting. The Meeting itself, should help to provide direction over the long term.
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.
Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.
Cryptocurrencies are not legal tender currency and trading of derivatives on Cryptocurrencies are currently not covered under any regulatory regime in Singapore. Consequently, investors should be aware they do not have protection under the Securities and Futures Act (Cap. 289). Please ensure that you are fully aware of the risks.