USDSEK Rebound Accelerates After Weak Sweden Industrial Production
USDSEK continues the rebound from two-year lows after the Sweden Industrial Production dropped to 3.4% in July from 6.6%. The yearly reading for the Sweden Industrial Production rose to -6.5% from previous -9.1%. The New Orders Manufacturing registered in at -6.4% below the expectations -5.9% in July.
Swedish krona appreciated against the dollar after the shift to its policy framework from the Fed, giving priority to employment growth and leaving the inflation to rise above the 2% target.
The Swedish GDP contracted by 8.6% in the second quarter of the year, marking the worst contraction since 1980. Sweden followed the contraction in GDP despite the more relaxed approach to the COVID-19 outbreak.
On the other hand, the U.S. Nonfarm Payrolls on previous week showed that 1,371,000 jobs created in August in line with expectations. Positive surprise from the U.S. unemployment rate, which dropped to 8.4% well below the expectations of 9.8%, the July reading was at 10.2%.
USDSEK will continue to move on the state of the recovery in USA and Sweden while the risk sentiment will play an important role as risk appetite will continue to drive investors to risky assets and away from the USD.
USDSEK Technical Analysis
USDSEK is 0.32% higher at 8.7867 as the rebound from two-month lows accelerates targeting the 50-day moving average. The momentum remains bearish despite the rebound as I have mentioned in my previous USDSEK analysis: USDSEK Rebounds From 25-Month lows – But Bearish Momentum Intact First resistance for USDSEK stands at 8.8201 the top from August 21. The critical resistance is at 8.8541 – the 50-day moving average – which if breached would attract more bids.
On the downside, initial support for USDSEK pair is at 8.7470 today’s low. Next support for USDSEK would be met at 8,7100 the low from yesterday’s trading session. More buying interest might emerge at 8.6066 the low from September 1.