USD/SEK in a tight range after strong US and Sweden inflation data
- The USD/SEK pair declined after the latest inflation data from Sweden and the US.
- In Sweden, electricity prices helped push the headline CPI to 2.0%.
- In the United States, the headline CPI rose by 4.2% in April.
The USD/SEK is loitering near its lowest level since February 25 after the latest Sweden and United States consumer inflation data. The pair dropped to 8.3272, which is 5% below the highest point in 2020.
Sweden inflation steadies
The Swedish economic recovery is gathering momentum as the country accelerates its vaccination process. This growth was confirmed two weeks ago when the government published GDP numbers that beat analysts’ estimates. The economy expanded by 1.1% in the first quarter, which was better than the median estimate of 0.5%.
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Inflation is also rising slowly according to data published by Statistics Sweden. The agency said that the headline CPI rose by 0.2% in April, as most analysts were expecting. This led to an annualised growth rate of 2.2%, which was also better than the previous 1.7%.
Meanwhile, the consumer price index at a constant interest rate rose from 0.2% in March to 0.3% in April. This led to year-on-year growth of 2.5%. This performance was due to a higher price of electricity, fuel, and books.
These numbers are important for the USD/SEK because they imply that the Riksbank will not be inclined to push interest rates to the negative zone.
The USD/SEK is also reacting to the latest consumer price index data from the United States. The data revealed that the overall CPI rose from 0.6% in March to 0.8% in April. In turn, this pushed prices 4.2% higher than at the same time last year. This was the highest level in 13 years. It is also higher than the median estimate by analysts.
Additionally, core CPI increased by 0.9% on a MoM basis, leading to a YOY gain of 3%. The numbers are higher than the Federal Reserve target of 2.0%.
USD/SEK technical outlook
The USD/SEK price rose slightly after the latest US and Sweden inflation numbers. It rose to 1.3815, which is slightly below this week’s low of 8.2950. On the four-hour chart, the pair remains below the short and longer-term moving averages while the Relative Strength Index (RSI) moved from the oversold level of 22 to the current 46. Therefore, the pair will likely resume the downward trend as investors bet that the recent inflation is temporary.