USDSEK trades higher on Monday amid increasing fears that the recent escalation in China-USA tensions will have a significant impact on the already battered global economy. Investors ignored weak data from the USA as they have shifted their focus on the unemployment data later on the week. The Factory Orders reported earlier came in at -10.3%, below the forecasts of -9.7% in March. The ISM-NY Business Conditions Index came down to 4.3 in April well below the March reading of 12.9.
From Sweden, the Manufacturing PMI dropped to 36.7 in April from a downwardly revised 42.6 in March, marking the steepest contraction in the manufacturing sector since February 2009. Major sub-indexes also contracted, with new orders down to 25.2 below the 33.8 reading in March, the production index came in at 26.6 below the March 35.9, while the employment index registered at 40.4 below the March 45.3 reading.
Swedish officials expect now that the economy will shrink 4% in 2020 as the coronavirus spread hits demand and supply. The contraction this year is expected to be nearly as deep as during the global financial crisis in 2009 when Sweden’s economy contracted by 4.2%, the biggest decline in over 50 years.
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USDSEK is 0.70% higher at 9.9008 breaking above the 50-day moving average a level that the pair breached below last week as the risk appetite returned to markets amid the reopening of businesses of many countries around the globe. The technical picture is bullish for USDSEK as the recent correction ended today with the pair breaking back above the 50-day moving average.
On the upside, first resistance will be met at 9.9430 the daily top. A move above would attract more bids for an attempt to the next resistance level at 10.0407 the high from April 28th. The next supply zone is at 10.1212 the high from April 24th.
On the flip side, the initial support for the USDSEK pair stands at 9.8296 the daily low. The next support zone might emerge at 9.7447 the Friday lows. Next support stands at 9.7117 the 100-day moving average.