SWEDEN: Consumer Sentiment At Lowest since Dec '23; Weak Employment Signals
The Swedish April Economic Tendency Indicator weakened to 94.8 (vs a two tenth downwardly revised 95.0 prior), its lowest since August. The fall was driven by consumers, with overall industry sentiment actually ticking higher on the month. However, expected employment metrics softened, which taken alongside an uptick in firm inflation expectations, highlights a difficult trade-off for the Riksbank. Overall, the survey should support rates to be kept on hold at 2.25% on May 8, but the risks are tilted towards more easing ahead, in our view.
- Consumer confidence reached its lowest since December 2023 at 81.6 (vs 88.8 prior). Consumer’s view of their own personal situation and the general economic situation both deteriorated notably.
- Aggregate business confidence was 99.9 (vs 98.9 prior).
- Manufacturing sentiment rose to 99.6 (vs 96.7 prior), driven by an increase in expected production over the next three months. There was also an uptick in past export orders, which could reflect some tariff front-loading.
- Retail (105.1 vs 104.7 prior) and services (98.0 vs 97.7 prior) sentiment rose a touch, while construction (100.0 vs 101.5) softened.
- There was a fall in expected employment metrics across industries, with manufacturing respondents seeing the first net negative reading since July 2024.
- On an aggregate basis, expected price metrics softened a touch but remain well above last year’s average (23 in April vs 24 in March, 14 avg in 2024). Expected prices amongst food retailers in particular remain elevated at 80 (vs 86 in March).
- Firms inflation expectations over the next 12 months rose to 2.7% Y/Y, from 1.7% in Q4.
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USDCAD TECHS: Bullish Outlook
- RES 4: 1.4700 Round number resistance
- RES 3: 1.4641 76.4% retracement of the Feb 3 - 14 bear leg
- RES 2: 1.4452/4543 High Mar 13 / 4 and a bull trigger
- RES 1: 1.4402 High Mar 20
- PRICE: 1.4292 @ 16:50 GMT Mar 28
- SUP 1: 1.4235 Low Mar 26 and a key near-term support
- SUP 2: 1.4151/4107 Low Feb 14 / 50.0% of Sep 25 - Feb 3 bull run
- SUP 3: 1.4011 Low Dec 5 ‘24
- SUP 4: 1.3944 61.8% retracement of the Sep 25 ‘24 - Feb 3 bull cycle
USDCAD traded through support at 1.4242 on Wednesday but has recovered. A return lower and clearance of this level would undermine the bull theme and instead highlight potential for a test of 1.4151, the Feb 14 low and a bear trigger. Moving average studies continue to highlight a dominant uptrend. A reversal higher would refocus attention on the bull trigger at 1.4543, the Mar 4 high. First resistance is 1.4402, the Mar 20 high.
US FISCAL: Debt Limit "Extraordinary Measures" Pick Up, But Cash Dipping Pre-Tax
Treasury data shows that there were $207B of "extraordinary measures" available to circumvent hitting the debt limit as of Wednesday Mar 26.
- That's the most since Jan 27th and up from $163B a week earlier, from a total $376B available.
- However, Treasury cash in the TGA fell to $316B as of the 26th (and was down to $280B on Thursday), meaning there were a combined $523B of resources available to avert the debt limit, the lowest since the impasse began in January (and half of the starting amount of just over $1T).
- The next couple of weeks will be very important for Treasury, as they represent the biggest tax take of the year. The Congressional Budget Office reported this week that per its estimates "if the debt limit [$36.1T] remains unchanged, the government's ability to borrow using extraordinary measures will probably be exhausted in August or September 2025." Treasury wrote to Congress this month that they would be able to provide an update on the x-date in the first half of May, after the conclusion of tax season.
AUDUSD TECHS: Remains Above Support
- RES 4: 0.6429 High Dec 12 ‘24
- RES 3: 0.6414 38.2% retracement of the Sep 30 ‘24 - Feb 3 bear leg
- RES 2: 0.6409 High Feb 21 and a bull trigger
- RES 1: 0.6391 High Mar 17 / 18
- PRICE: 0.6291 @ 16:46 GMT Mar 28
- SUP 1: 0.6258 Low Mar 21
- SUP 2: 0.6187 Low Feb 4
- SUP 3: 0.6171/6088 Low Feb 4 / 3 and a key support
- SUP 4: 0.6045 1.500 proj of the Sep 30 - Nov 6 - 7 price swing
AUDUSD is unchanged. A short-term bull theme is intact and the latest move down appears corrective. Key short-term support to watch is 0.6187, the Mar 4 low. Clearance of this level would reinstate a bear threat. First support is at 0.6258, the Mar 21 low. A stronger recovery would refocus attention on 0.6409, the Feb 21 high. Clearance of this hurdle would strengthen the bull cycle and resume the uptrend that started Feb 3.
