n 2010, it became clear that developed nations were all going to emerge from the recession of 2008 at various velocities. As this discrepancy between various nations became clear, speculators began taking positions according to who would be raising interest rates and who would be keeping interest rates artificially low for an extended period of time.
The United States and Japan have proved to be the two slowest moving countries in terms of returning monetary policy back to normal. Australia, New Zeland, and Sweden, on the other hand, are among those developed nations which initiated strong tightening cycles during 2010 and into 2011. And, of course, each of these currencies has rallied significantly versus the dollar and yen as speculators and financial traders shift capital out of low yielding assets into higher yielding assets due to increased risk appetite, which is a result of continued global economic recovery.
The Swedish Krona
The krona recently rose to 2 ½ year Highs versus the U.S. dollar as the Riksbank raised its short-term interest rate target by 25 basis points from 1.50 to 1.75. “The Riksbank is still expected to hike rates at every meeting this year, so the Swedish krona is still a good buy,” said John Hydeskov, chief analyst at Danske Bank A/S in London. “There’s scope for the krona to accelerate further.”
The Swedish Riksbank has been forced to begin raising rates due to uncomfortably high inflation rates. The economy grew by 5.5 percent in 2010, and experts predict the economy will continue to expand by 4.6 percent in 2011. Currently, inflation is sitting at about 3.2 percent, compared to the February prediction of 2.5 percent. The fact that inflation is creeping higher so fast has forced the Riksbank to take action by raising short-term interest rates in an attempt to curb higher inflation. The trading spread has remained consistent at most forex brokers.
Follow the Money Trail
Money managers around the world share the common goal of earning a strong return for customers, and this basic investing truism is why capital tends to flow out of lower yielding assets and into higher yielding assets. As long as the global recovery stays intact throughout the second half of 2011, the Swedish krona should continue to rise versus the U.S. dollar as the Federal Reserve continues to keep artificially low interest rate policy in place.
As you can see in the chart above, in currency trading the krona has moved higher versus the dollar throughout the first quarter of 2011, largely based on the interest rate rise. The Riksbank has been quite forward with the fact that they will consider raising rates at every remaining meeting in 2011, which means the currency could be sitting at 2.5 percent by first quarter 2012, while analysts expect the U.S. dollar to still be under 2 percent during the same timeframe.
If inflation begins to rise more aggressively in Sweden, the central bank could be forced to take a more aggressive interest rate stance, which could include a more aggressive tightening schedule, which would most likely drive further gains into the krona.
copied from http://www.stockholmnews.com/more.aspx?NID=7222
The United States and Japan have proved to be the two slowest moving countries in terms of returning monetary policy back to normal. Australia, New Zeland, and Sweden, on the other hand, are among those developed nations which initiated strong tightening cycles during 2010 and into 2011. And, of course, each of these currencies has rallied significantly versus the dollar and yen as speculators and financial traders shift capital out of low yielding assets into higher yielding assets due to increased risk appetite, which is a result of continued global economic recovery.
The Swedish Krona
The krona recently rose to 2 ½ year Highs versus the U.S. dollar as the Riksbank raised its short-term interest rate target by 25 basis points from 1.50 to 1.75. “The Riksbank is still expected to hike rates at every meeting this year, so the Swedish krona is still a good buy,” said John Hydeskov, chief analyst at Danske Bank A/S in London. “There’s scope for the krona to accelerate further.”
The Swedish Riksbank has been forced to begin raising rates due to uncomfortably high inflation rates. The economy grew by 5.5 percent in 2010, and experts predict the economy will continue to expand by 4.6 percent in 2011. Currently, inflation is sitting at about 3.2 percent, compared to the February prediction of 2.5 percent. The fact that inflation is creeping higher so fast has forced the Riksbank to take action by raising short-term interest rates in an attempt to curb higher inflation. The trading spread has remained consistent at most forex brokers.
Follow the Money Trail
Money managers around the world share the common goal of earning a strong return for customers, and this basic investing truism is why capital tends to flow out of lower yielding assets and into higher yielding assets. As long as the global recovery stays intact throughout the second half of 2011, the Swedish krona should continue to rise versus the U.S. dollar as the Federal Reserve continues to keep artificially low interest rate policy in place.
As you can see in the chart above, in currency trading the krona has moved higher versus the dollar throughout the first quarter of 2011, largely based on the interest rate rise. The Riksbank has been quite forward with the fact that they will consider raising rates at every remaining meeting in 2011, which means the currency could be sitting at 2.5 percent by first quarter 2012, while analysts expect the U.S. dollar to still be under 2 percent during the same timeframe.
If inflation begins to rise more aggressively in Sweden, the central bank could be forced to take a more aggressive interest rate stance, which could include a more aggressive tightening schedule, which would most likely drive further gains into the krona.
copied from http://www.stockholmnews.com/more.aspx?NID=7222
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