Sweden Disappoints

Sweden's industrial order and production data disappointed the market. August industrial production was expected to have risen almost 1%, but increased Sweden reported a 2.9% decline, which is the largest drop in the cycle. And, adding insult to injury, the July decline was revised to -0.6% from -0.5%. The year-over-year rate edged lower to -20.9% from a revised -20.6%. The consensus had expected a -18.4% year-over-year decline. Orders fell 4.2%, reversing half of the 8.4% increase in July. The year-over-year decline slumped to -18.1% from -16.9%.

Separately the Swedish government announced a 6 month extension (to the end of April 2010) of its guarantee for Swedish banks. This decision comes as there are heightened concerns about exposure to Latvia, which is struggling to reduce the budget deficit further.

The krona is trading within yesterday's wide range against the euro. Yesterday's high near SEK10.3665 is important, but more significant resistance is seen near SEK10.40. Support now is seen near SEK10.25.