BUZZ-COMMENT-Currency green light for the Riksbank

Reuters
05 Dec 2024

Dec 5 (Reuters) - A blip higher in Swedish flash November inflation but a recovery in the crown and sluggish economic growth should allow the Riksbank to cut rates by 25 basis points when it meets on Dec. 19.

The currency continues to be a key consideration for Sweden's central bank but a near 2.0% appreciation since Nov. 5 and a 2.5% gain since July has given the bank room to ease policy.

Inflation data for November exceeded the Riksbank's 0.9% year-on-year call but matched the Reuters poll consensus of 1.9%. The Riksbank has a 2.0% target for inflation, so the latest data is tolerable.

Swedish growth is under the spotlight and more a focus for the central bank. Unemployment is high and there are concerns for the eurozone economy. Inflation expectations are contained and there is little indication that prices are accelerating.

Technically, there are signs that EUYR/SEK could edge higher again as key support points hold strong. A 50% Fibonacci level, 100 and 200-day moving averages, and the daily cloud top are converging at the 11.4650-11.7800 area. To the topside the 10-day moving average might slow any EUR/SEK advance but there is risk of corrective gains following Wednesday's 11.5810 to 11.4811 drop.

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(Peter Stoneham is a Reuters market analyst. The views expressed are his own)

((peter.stoneham@thomsonreuters.com))

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