Australian Dollar to Swedish Krona (AUD/SEK) Exchange Rate Edges Lower on Market Sentiment

The Australian Dollar has seen a few days of solid appreciation after the Reserve Bank of Australia (RBA) opted to hold rates in the face of ‘Aussie’ (AUD) overvaluation. Wednesday’s Australasian session saw the Oceanic currency continue to gain thanks to a combination of positive domestic growth data and a good result from China’s Services PMI. Australian Gross Domestic Product saw an annual increase of 2.3% in the first-quarter; bettering the market consensus of 2.1% economic growth. On a quarterly basis, GDP bettered the median market forecast 0.7% in the first-quarter, with the actual result advancing by 0.9%.

‘[Wednesday's] release confirms our view that the Australian economy is moving along at a steady pace, but needs more capital investment to grow at a more desirable rate,’ stated Pitcher Partners director of wealth management David Lane. Others have been praising the GDP figures as highlighting the rebalance of the Australian economy from resource-based investment. ‘The contribution of mining to annual growth ebbed to 0.4 percentage points, having been at 1.2 percentage points a year ago,’ said JP Morgan's Australia economist Ben Jarman.

During Wednesday’s European session, however, the ‘Aussie’ pared some of its gains thanks to a slightly stronger US Dollar and dampened market sentiment amid geopolitical tensions in Europe. Also, trader profit-locking could account for some of the South Pacific assets depreciation after the recent surge opened up some attractive selling opportunities.

The Australian Dollar to Swedish Krona (AUD/SEK) exchange rate is currently trending in the region of 6.5393.

The Swedish Krona, meanwhile, advanced versus many of its closest rivals after domestic data printed positively. The Services PMI was forecast to rise from 54.0 to 55.5, but the actual result reached 58.2 in May. The gains have been somewhat sluggish, however, after some officials from Riksbank warned that risks to the health of the economy and financial system have increased thanks to households’ mounting debt.

‘Sweden’s financial system is currently working well but the risks of external shocks have grown recently as low interest rates have fuelled investors’ demand for more high-risk assets and encouraged households to continue borrowing,’ stated Anna Molin of The Wall Street Journal. ‘The country’s four largest banks are all closely interlinked and highly dependent on market funding, with a small share of capital in relation to assets, making them vulnerable to outside pressures,’ she added.

Australian Dollar to Swedish Krona (AUD/SEK) Exchange Rate Forecast to Hold Losses

Given the lack of further domestic data publications to provoke changes, the Australian Dollar to Swedish Krona (AUD/SEK) exchange rate is likely to hold losses for the remainder of Wednesday’s European session. Thursday is likely to see heightened AUD/SEK volatility with several data publications pertaining to both nations due for release.