Krona slumps as Swedish jobless data hits four-year high

Bloomberg

Sweden’s unemployment rate unexpectedly spiked to a four-year high in August, raising questions around the central bank’s plans to hike interest rates and driving the krona lower.
The seasonally-adjusted jobless rate jumped to 7.4 percent, much worse than the 6.8 percent reading in a Bloomberg survey of economist estimates. The news, which resulted in a 0.8 percent decline in the krona against the euro, was quickly dubbed “a catastrophe” by Martin Enlund, a currency strategist at Nordea Bank Abp in Stockholm.
At Svenska Handelsbanken AB, Head of Trading Strategy Claes Mahlen said the data “adds to our view that Riksbank will ultimately call off planned rate rises.”
The latest jobless report is bad news for Finance Minister Magdalena Andersson, who is due to present the 2020 budget on Wednesday.
It will also make it harder for the Riksbank to commit to its plan to raise interest rates again around the turn of the year. The report coincided with the publication of minutes from the Riksbank’s latest rate meeting, which shed light on the continued debate among board members over the appropriateness of raising rates.
Jesper Petersen, an analyst at Danske Bank in Stockholm, said, “The Riksbank minutes clearly show some degree of division within the board and even though the actual minutes might be considered as hawkish on their own,” it’s worth noting that they reflect a conversation that took place before the ECB’s latest decision, and before a number of key economic statistics were published in Sweden, including the jobless report, “which all have played out as negative for the Riksbank’s scenario.”