USD/SEK consolidates after weak Swedish industrial production data
- The USD/SEK pair rose slightly after the relatively weak Swedish industrial production data.
- The numbers showed that the country’s industrial production dropped to 0.2% in April.
- Household consumption also declined by 5.1% in April.
The USD/SEK pair rose by more than 0.25% on Tuesday after the relatively mixed economic data from Sweden. The pair rose to 8.2800, which is about 0.45% above the lowest level in May.
Sweden industrial production
In a report by Statistics Sweden, the country’s industrial production declined in April this year. It dropped by 0.2% in April after rising by 0.9% in the previous month. The production rose by 10.7% on a year-on-year basis, because of the slowdown experienced in the previous month.
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The biggest contributor to the Swedish industrial production was the auto sector, which rose by 8.8% as local and international demand for cars rose. This growth was partially offset by the 0.1% decrease of the chemical and pharmaceutical industry. Further, services production increased by 9.2% in April.
Further data showed that the total orders declined by 2.5% in April. They rose by 30.5% on a YoY basis because of the low base since demand fell last year. Meanwhile, household consumption, the largest contributor to the Swedish GDP fell by 5.1% in April. Transport and retail sales were the biggest contributors to this spending.
These numbers show that the Swedish economy will likely record a relatively small expansion in the second quarter. It will then do well for the rest of the quarter as local and international demand rises.
Looking ahead, the next key driver for the USD/SEK pair will be data from the United States. On Thursday, the Bureau of Labour Statistics (BLS) is expected to publish relatively strong May inflation data. Precisely, analysts expect the data to show that the headline CPI rose by 4.7% in May while core CPI rose by more than 3%. These numbers will come at a time when analysts are pricing in rate hikes in the United States.
USD/SEK technical analysis
The four-hour chart shows that the USD/SEK has been in a tight range recently. Along the way, the pair has formed a descending wedge pattern that is shown in red. It is also at the same level as the 25-day and 15-day exponential moving averages. In a falling wedge, a bullish signal emerges when the two lines move close to the confluence zone. Therefore, since this confluence is not near, the pair will likely remain in a consolidation pattern for a while.