Swedish Krona: Solid Swedish data supports SEK – Danske Bank

Danske Research Team notes that revised Swedish national accounts data point to stronger historical growth but slightly weaker current momentum. Q1 GDP declined quarter-on-quarter but rose year-on-year, with weakness driven by government consumption and investment. Household consumption surprised on the upside, and the overall release was stronger than the headline suggests, prompting a reassessment of stimulus needs and a marginally more hawkish Riksbank interpretation as EUR/SEK trades near April lows.

Swedish data underpin firmer Krona tone

"Scandies were steady on Friday, with EUR/SEK trading around 10.77 and close to the low from April."

"In Sweden, significant revisions to national accounts data showed stronger historical growth but slightly weaker momentum at present."

"In Q1, GDP fell 0.2% q/q while rising 2.0% y/y, with the weakness reflecting mainly a larger decline in government consumption and investments after the strong uptick in Q4."

"Household consumption, the most important demand component right now, grew more than expected, rising 0.6% q/q."

"Overall, the release was more solid than headline figures suggest, and the need for further stimulus should be re-assessed on the back of these numbers."

"Given the Riksbank's unusually large focus on resource utilisation and the slow recovery, the data should be seen as hawkish on the margin."