Swedish krona at over four-year lows vs majors but at 10-month high vs NOK ahead of key data

The Swedish currency has been holding near the lowest level since mid-2010 against the dollar, the euro and the pound but at a ten-month high against the Norwegian kroner ahead of inflation and jobs data from Sweden and Norges Bank rate decision.

The Swedish consumer price inflation and unemployment rate for November will be out at 8:30 GMT and Norges Bank will announce rates at 9:00 GMT.

Sweden has been witnessing a deflationary trend throughout this year. The year-on-year CPI rate has been either zero or negative since January with an exception of June when it came at 0.2%. It was -0.1% for October, slightly higher than -0.4% recorded for the previous month.

In order to reflate the economy, Sweden cut its benchmark interest rate to 0% at its 28 October meeting. It was the second cut this year, the first coming in July from 0.75% to 0.25%.

The unemployment rate had jumped sharply in July to 7.1% from a four-year high of 9.2% in the previous month but has since been inching higher. It was at a four-month high of 7.5% in October and analysts expect a slight decline in the rate for November.

The Swedish unit has shown some strength against the dollar this week, and moved off Monday's multi-year high of 7.60 to 7.50. However, the krona has not ended a month stronger after February, since when it has fallen more than 15%.

Against the euro and the pound, the Swedish currency has been testing key support levels based on intra-month levels, but on a closing basis, the krona has fallen to fresh multi-year lows vs them.

The krona has weakened more than 10% against the euro from the February levels. The EUR/SEK cross is now trading near 9.3760, its highest since August 2010.

The pound has been trading near 11.9 against the Swedish currency since October, which is a 4-1/2-year high for the cross. The krona was up 1.2% against the sterling in November but has given back the gains entirely so far this month.

Norges Bank is unlikely to alter the benchmark interest rate from 1.5% at the policy review on Thursday but remarks on growth, inflation trends and exchange rate levels can move the currencies NOK as well as SEK.

The NOK/SEK cross had hit a fifteen-month high of 1.13 before turning south in September. It has since ended all the months lower, and at the lowest so far in December, the Swedish currency was 8.7% up against its neighbour unit from the September levels.

Norwegian core inflation is hovering in a range of 2.2-2.5% but the GDP growth rate has been volatile in recent quarters.

The first quarter saw a sharp jump to 4.2%, mainly helped by very low base as the Q1-2013 rate was -2.8%. The growth rate then fell to 0% but has made a big comeback in the third quarter to 2.1%.