CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
✖

USDSEK Will Swedens Herd Immunity Strategy Backfire

Article By: ,  Head of Market Research
April 1, 2020 12:05 PM

USD/SEK: Will Sweden’s “Herd Immunity” Strategy Backfire?

Across the globe, different countries are taking different approaches to managing their own experiences with the COVID-19 pandemic, running the gamut from the aggressive testing and medical intervention of South Korea to the UK’s brief experiment with continuing “business as usual” in an effort to accelerate “herd immunity.”

Of course, the UK quickly abandoned its herd immunity strategy in favor of the more common “flatten the curve” mantra of other developed nations, but one Western country is leaving its malls, restaurants, and ski resorts open: Sweden. As detailed by The Wall Street Journal earlier this week, the country is relying on “voluntary advice and a big dose of hope” to limit the spread of the virus in contrast to the more aggressive mandates and interventions of other developed nations.

Based on the early results, which show the country’s death toll increasing by approximately 25% per day (up to nearly 60 as of yesterday and doubling every 2-3 days), Sweden’s approach to “managing” the virus may ultimately prove to be a colossal mistake for both its populace and its economy. Traders who agree may want to explore short positions in the Swedish krona (SEK), and when it comes to the FX market, no currency is in more demand that the US dollar.

From a technical perspective, USD/SEK tagged an 18-year high near 10.50 last Monday before ultimately falling every day that week to retrace 50% of the mid-March surge. So far this week, rates have stabilized above that 50% level and the 21-day exponential moving average, suggesting that bulls are aggressively defending the 9.90 area:

Source: TradingView, GAIN Capital

If the public health/economic toll in Sweden continues to surge, USD/SEK could resume its recent uptrend and retest the March highs at 10.50, if not beyond that, in the coming days and weeks. Of course, a break below last week’s low near 9.85 could indicate that Sweden’s unconventional is effective and could open the door for USD/SEK to drop toward the Fibonacci retracements at 9.75 (61.8%) or 9.55 (78.6%) as we move through April.


StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

© City Index 2024