Dealers reported good interest to sell Swedish krona at the just-past 16:00 GMT fixing. Why is that significant? I could be further confirmation that investors are fleeing investments in countries that have large exposures to Central and Eastern Europe. Swedish banks are significant lenders to the neighboring Baltic states and have been caught up in the fear of potential banking failures in Western Europe stemming from too much lending to the East.
The fall of Latvia’s government earlier today merely compounds these fears. One more reason EUR/USD rallies should remain limited. We trade now at 1.2603.
