The USD/SEK price was little changed on Friday after Sweden published relatively mixed economic data. It is trading at 8.2856, which is 0.45% above the lowest level this year.
Sweden GDP data
In a report on Friday, Statistics Sweden said that the economy expanded by 0.8% in the first quarter from the previous quarter. The economy was unchanged on a year-on-year basis, an improvement from the previous contraction of 2.2%. This was in line with what analysts polled by Reuters were expecting.
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According to the bureau, the economic recovery was driven by household consumption, which increased by 0.5% in the first quarter. The consumption was helped by an increase of the transportation sector.
The government consumption increased by 0.4%, led by a 1.5% increase of central government spending. The growth of the two sectors was offset by a 0.1% decrease of capital expenditure as companies observed the trajectory of the pandemic.
Meanwhile, household disposable income, which is an important factor of consumption, declined by 0.6% while the number of employed people rose by 0.3%.
The USD/SEK pair also reacted to the relatively weak April retail sales numbers. The data revealed that the overall volume of retail sales declined by 1.4% in April compared with March. This was partly because of a 2.6% decrease in durable goods. Still, sales rose by 3.8% in the past three months to April and by 7.2% year-on-year in April.
Still, analysts expect that the Swedish economy will bounce back significantly going forward. For one, the country is ramping up its vaccination drive. At the same time, its neighbouring countries are doing the same and are expected to buy more goods from the country.
Looking ahead, the USD/SEK will react to the latest US personal income and spending data that will come out on Friday afternoon. It will also react to the closely watched personal consumer expenditure (PCE) data.
USD/SEK technical outlook
The three-hour chart shows that the USD/SEK pair has been in a strong downward trend in the past few weeks. The pair is actually hovering near its lowest level since 2018. Still, a closer look shows that it has formed a descending wedge pattern that is shown in purple.
In technical analysis, this pattern signals that the price will soon have a bullish breakout. However, the pattern has not moved to the confluence level. Therefore, in the near term, the pair will likely remain in this range and then break out higher in the coming weeks.