Sweden’s Krona Sinks as Confidence Data Miss Economist EstimatesNiklas Magnusson
Sweden’s krona slumped after a report showed consumer and business confidence in the largest Nordic economy is lagging behind economist predictions.
The numbers were “a bit mixed with some signs of weakness, especially in the manufacturing industry,” Torbjoern Isaksson, chief analyst at Nordea Bank AB’s Markets Research unit, said in a note.
The krona dropped as much as 0.6 percent against the euro to 9.0534 and traded 0.5 percent lower as of 9:31 a.m. in Stockholm. Versus the dollar, it sank as much as 0.7 percent to become the day’s biggest loser of the major currencies tracked by Bloomberg.
Weak economic data are adding to speculation that the central bank will need to cut its main interest rate in July. Subdued demand and Scandinavia’s highest jobless rate have capped consumer price growth. Sweden has even suffered bouts of deflation, prompting two members of the central bank’s six-person board to argue in favor of lower rates.
An index measuring consumer confidence rose to 100.4 in May from 99.2 a month earlier, a report showed today. Economists surveyed by Bloomberg had predicted a rise in the gauge to 100.7. A separate index for manufacturers fell to 94.5 from 102.3, when economists had foreseen an increase to 102.9.
The central bank held its repo rate at 0.75 percent in April. Its next rate announcement is due July 3.
According to Nordea, today’s report also revealed some positive signs.
“We see details in the report as more encouraging than the drop in the overall confidence indicator suggests,” Isaksson said. “Not least did the sub-index for export orders to the manufacturing industry rise from an already good level. In addition, industrial production has increased in recent months, according to the survey.”