The USD/SEK pair fell slightly as traders responded to the rising number of Covid 19 cases in Sweden.
The pair has been in sharp decline since September when it peaked at 9.15.
It will react to Swedish industrial production data later today.
The USD/SEK pair fell 0.10% today as the number of Covid-19 cases in Sweden and the rest of Europe continues to rise. It is trading at 8.7385, slightly below Friday’s high of 8.7937.
USD/SEK falls as Covid cases rise
Increase in Swedish Covid-19 cases
Sweden has made headlines in recent months for its response to the coronavirus pandemic. The country decided not to impose barriers, as its neighbors did. As a result, it reported more than 111,000 cases and more than 5,933 deaths.
Now the country is struggling with another wave of the virus as the number of cases increases. Yesterday it confirmed more than 1,255 new cases, the highest number since June this year. Worse still, as you can see below, the number of cases has been slowly increasing in recent weeks.
Sweden Covid-19 cases
The new cases run the risk of halting the country’s recent growth. Recent data showed that PMI figures in manufacturing and services were above 50 for the third consecutive month. The unemployment rate dropped from 8.8% to 8.3%, while industrial production declined by 7.8% in September.
Inflation was relatively low, however, with the headline CPI rising by 0.4% and the CPI at constant interest rates by 0.3%. The country’s statistical office will release household credit growth and trade figures later today.
Another challenge for the Swedish economy is that infections in neighboring countries have risen sharply. In Norway, its neighboring country, cases have skyrocketed, forcing the government to reinstate some of its restrictions. The same is happening in countries like Germany, France, Spain and Italy. As a result, the demand for Swedish goods will be affected, at least in the near future.
All this also points to the Riksbank, the oldest central bank in the world. As part of its restructuring efforts, the bank has lowered interest rates to zero and taken further measures. For example, it has provided the banks with more liquidity to support lending. If the situation worsens, there is an increased probability that the bank will return to negative interest rates later this year or early 2021.
Technical outlook USD/SEK
Technical Analysis USD/SEK
The four-hour chart shows that the USD/SEK price has been in a strong bearish trend since September, when it peaked at 9.1622. Since then, the pair has completed almost 78.6% of its moves, and is trading at its lowest level since September 10th. The price has also moved below the 25-day and 15-day exponential moving averages. As such, the path of least resistance for the pair is lower at this time, with the next support level at 8.700. Start trading with our free forex courses.