steve.jarvis's picture

Medium-term outlook for Swedish Krona

Concerns are rising for a resumption of Swedish Krona losses after recent corrective strength against a very weak Euro helped mask it's underlying bearish trend.

Once every week I undertake a thorough examination of 10 major Currencies and then rank them all against each other and classify each as bullish, neutral or bearish.  Typically no more than 4 will fall into one category.  Every week there are minor changes in the pecking order, which I'm not really interested in, what I'm really looking for is those which are moving out of the bullish or bearish categories into neutral and then monitoring these closely over the following weeks to see whether this was just a blip or whether a full-scale trend reversal is under way.

One Currency which I've had in the bearish category now for many months is the Swedish Krona, and for much of this time it's actually been ranked 10th of 10.  If anything, it now shows signs of starting to weaken significantly once again following a period of relatively stability, during which time it retraced a significant part of multi-month losses against the EURO, but without coming out of a major downtrend phase against the unified Currency. The SEK's trend against the US Dollar and Norwegian Krone remains firmly down.

Being a Technical Analyst rather than an Economist I have just made a few searches for information on the Swedish Economy and from this it seems clear that all is not well with the Swedish economy.

 The following comments stood out.

"Swedbank Lowers GDP Forecast For Sweden Citing Eurozone Weakness"......

"Swedish government cuts growth forecast, says to raise more taxes" .......

"Mum's the word on soaring Swedish household debt" .....

" Public sector wages grew 4.7% in Q2. But the economy is close to deflation"....

It has often been said that market forecasting has a greater chance of being correct when the Technical and Fundamental forecasts are aligned.  The Swedish Kronor may well have been weak for many months, but could it just be that this trend has quite a bit further to go?