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SEK: EURSEK Pierces Oct 1 Low, EMA "Death Cross" Imminent

SEK
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EURSEK has inched below the Oct 1 low at 11.3024 to extend this week’s selloff, now another 0.3% lower today. Bearish momentum will be bolstered by an imminent crossover of the 50- and 20-day EMAs, with the Sep 27 low at 11.2450 the next downside target.

  • Further tightening of the 2-year EUR vs SEK swap differential has factored into today’s selloff (-3.5bps today to -12.1bps, its tightest since early January).
  • Front-end SEK rates rose notably yesterday following the higher-than-expected flash January CPI reading. None of the analysts whose Riksbank forecasts we track now look for a March cut.
  • This week’s rally in European equities may have also provided a tailwind to the SEK, though we note that the relationship between equities and EURSEK has been less clear since mid-January (see chart).
  • Despite this, SEK may still be susceptible to swings in global risk sentiment following the US labour market report at 1330GMT.
  • Next week’s Swedish calendar includes monthly activity data for December (which fed into the weaker-than-expected Q4 flash GDP indicator) alongside the Public Employment Service’s January labour market data.
  • There may be more interest in speeches from Riksbank Deputy Governor’s Seim and Jansson, to gauge current Executive Board thinking around the future path for rates.
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EURSEK has inched below the Oct 1 low at 11.3024 to extend this week’s selloff, now another 0.3% lower today. Bearish momentum will be bolstered by an imminent crossover of the 50- and 20-day EMAs, with the Sep 27 low at 11.2450 the next downside target.

  • Further tightening of the 2-year EUR vs SEK swap differential has factored into today’s selloff (-3.5bps today to -12.1bps, its tightest since early January).
  • Front-end SEK rates rose notably yesterday following the higher-than-expected flash January CPI reading. None of the analysts whose Riksbank forecasts we track now look for a March cut.
  • This week’s rally in European equities may have also provided a tailwind to the SEK, though we note that the relationship between equities and EURSEK has been less clear since mid-January (see chart).
  • Despite this, SEK may still be susceptible to swings in global risk sentiment following the US labour market report at 1330GMT.
  • Next week’s Swedish calendar includes monthly activity data for December (which fed into the weaker-than-expected Q4 flash GDP indicator) alongside the Public Employment Service’s January labour market data.
  • There may be more interest in speeches from Riksbank Deputy Governor’s Seim and Jansson, to gauge current Executive Board thinking around the future path for rates.
image