After reaching a historical peak in October, the rates turned down as expected. The Swedish krona, like the euro, began to recover against the dollar. This was undoubtedly facilitated by the weakening of the US currency, the decline in energy prices, and the slowdown in inflation. What awaits the Swedish krona after a period of calm on the market? Will there be a final trend reversal, or can the krone's strengthening period be seen as a price correction, after which the krone will test the highs again? - Both scenarios are possible this year.
The focus of investors this week was inflation in the US. This week's inflation report showed a slowdown in inflation for the sixth month in a row. In December, inflation increased by 6.5%. This reduces interest in the dollar, since the rate can be kept at the same level if the current rate successfully counteracts inflation. Earlier, the regulator pointed to the possibility of a further increase in 2023, which can be revised "as much as necessary".
Volatility will pick up next week. We have to estimate the volume of retail sales, the number of building permits, the index of manufacturing activity of the Philadelphia Fed. In general, nothing is expected to threaten the Swedish krona. There will be good chances for further strengthening next week. Sweden's economic indicators are at a good level: business activity according to the latest data is above 50 pips and is generally higher than in neighboring countries, while dependence on Russian resources is not relevant for this country. Most technical analysis tools indicate the effectiveness of short trades. Perhaps, we will open such deals right today to have some profit with SEK.
