USD/SEK: Fundamental Review & Forecast
The rates continue within the upward trend formed in early 2018. A month earlier we saw signs of a trend change, but this did not happen. Quotes again rushed up in favor of the USD. The increase in the interest rate by the Central Bank of Sweden and the fairly hawkish attitude, amid the central banks of other countries, including the United States, soften monetary policy and did not change the situation. This time the reason for the continuation of the uptrend and the weakening of the SEK is outside Sweden, in the Eurozone, which is experiencing a serious economic downturn. This certainly affects Sweden, which is also part of the EU and is highly dependent on exports to the EU.
Recent data on the EU economy do not encourage investors, but raise new concerns among them. Despite some improvement in economic sentiment, according to the ZEW economic sentiment index, it remains negative for the ninth consecutive month. The trade surplus, at the same time, is declining amid falling exports and unemployment is growing both in the Eurozone as a whole and in Sweden. Another negative news was the threat of the introduction of duties by Donald Trump on cars from the EU, which can have an extremely negative impact on exports and the economy of the leading EU countries - Germany and France. If, however, this happens, we are waiting for another trade conflict that has a negative impact on the entire world economy.
The economic situation in the US is much better than in the EU. Of course, the USD may be under pressure due to the political confrontation between Donald Trump and Congress, but the USD is strengthening despite that due to high risks of investing in the Euro and other currencies of the region.
Next week will be much more saturated with economic reports. Expected are data on the real estate market in the US, the balance of foreign trade, and the US GDP for the 4th quarter. In this situation, the most optimal can be considered the deals in favor of the USD. Oscillators such as the MACD, Stochastic, and RSI at the same time indicate the efficiency of the deals to SELL, which, taking into account fundamental factors, are not yet relevant.