The Swedish krona turned out to be powerless in the confrontation with the USD amid growing concerns about the new strain of coronavirus and an increase in the incidence of infections in the EU. Being a risky asset, the SEK has felt the outflow of investments into safe currencies in full, given that the USD is traditionally strong whenever the pandemic worsens.
Macroeconomic reports published over the past week were unnoticed because investors focused on the coronavirus and its impact on the EU economy instead. Despite the fact that the pandemic is under control in Sweden itself and no collapse is observed there, the SEK is retreating under the influence of external factors, as the situation in the EU is worsening.
In the US, the focus is on the Fed and their willingness to tighten monetary policy. In particular, investors were encouraged by Jerome Powell's statement about his willingness to raise the rate due to high inflation. Unemployment reports, which showed a decrease in unemployment to a pre-pandemic level of 4.6%, caused a wave of purchases in the market. At the same time, it was reported that 550,000 jobs were added in November, while the number of applications for unemployment benefits was two times less, below forecasts. This turned out to be more than enough to consider the US economy and the USD the most attractive for investment.
Analysts believe that the rally in the USD/SEK pair will continue, despite the good economic situation in Sweden, simply because the USD is becoming a very strong currency. Moreover, there is every reason to expect that the rates will rise at least to the level of 10.00, following the maximum reached in December 2019. Technical analysis tools are also unanimously committed to the deals to BUY. Therefore, our choice for today is to buy the USD, selling the SEK.
