USDSEK Nearing All Time Highs

USD/SEK Nearing All Time Highs

The Swedish Krona generally moves inversely to the US Dollar. That is to say that generally, as the DXY moves higher, so does the USD/SEK. Looking at the correlation coefficient, the correlation between the USD/SEK and the DXY is .74. However, over the past year, the USD/SEK is up almost 7% while the DXY is up only 3.61%.

Source: Tradingview, City Index

The USD/SEK currently looks ready to break to all-time highs. One reason for the move is that although the key repo rate stands at -0.25%, there are concerns in the market that the Riksbank may have to maintain their neutral bias for longer than previously expected. The market is indicating a 95% chance the Riksbank will hold rates steady at their next meeting on September 5^th, an 85% chance they will hold steady in October, and a 77% chance they will hold rates steady in December. At the July meeting, they were indicating a possible hike later this year.

Source: Bloomberg

Another reason for the move higher in USD/SEK is that as with much of Europe, Sweden’s 10-year bond yield is negative, today at -0.37. The US 10-year bond yield is 1.47. This interest rate differential is causing the US Dollar to strengthen vs the Swedish Krona.

A daily Chart shows that although USD/SEK is trading in a rising wedge near 9.72, there is still room to move higher within the wedge (a break of the bottom trendline of the wedge would indicate a move lower). The top trendline comes in near 9.76. In addition, there is still room for the RSI to move higher, as it currently stands at 62. Overbought conditions are considered to be above 70. This means that there is still more USD/SEK buying that can occur before the RSI is considered overbought.

Source Tradingview. City Index

Over the next two weeks, perhaps there may be some volatility in USD/SEK as the Riksbank meeting gets closer. However, in general the trend is higher, and barring any impactful headlines, conditions have not been met yet to look for a strong pullback.

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.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX 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), StoneX Financial 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 StoneX Financial 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 StoneX Financial 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.

StoneX Financial 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 www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.

ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.

City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.

The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.

The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.

The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.

This advertisement has not been reviewed by the Monetary Authority of Singapore.