17 May 2021 12:13
NZD/SEK (New Zealand Dollar vs Sweden Kronor)
The NZD/SEK is not very popular currency pair on the Forex market. The NZD/SEK does not involve the U.S. dollar and that is why called a cross currency pair. Despite this, the U.S. dollar still has a significant influence on it. This can be seen if you combine two charts: NZD/USD and USD/SEK. Thus, you will get an approximate NZD/SEK chart.
Since the U.S. dollar heavily influences both currencies, it is necessary to take into account the major U.S. economic indicators for the correct projection of this financial instrument’s price movement. Pay attention to the discount rate, GDP data, unemployment rate, new jobs figures, etc. It is worth noting that the currencies comprising the pair can respond differently to changes in the U.S. economy, therefore, the NZD/SEK can be considered as a specific indicator of these currencies.
When you trade the NZD/SEK currency pair, you should allow for many features of the New Zealand economy, including the GDP, discount rate, business activity, its foreign trade policy, etc. New Zealand is one of the world’s largest producers of wool and other wool-related products. It is worth noting that New Zealand's economy is highly dependent on its main partners - the U.S., Australia, and other Asian-Pacific nations. For this reason, you should also take into account a variety of economic indicators of major trade partners of New Zealand.
Swedish economy is one of the most leading in the world. In terms of industrial output it is far ahead of its nearest neighbors, including Denmark, Norway and Finland. The country has managed to achieve such high economic performance due to the fact that it is rich in mineral resources and has great experts in all sectors of economy. Sweden has large reserves of iron ore and nonferrous metals. In addition, it is rich in timber and has large hydropower resources.
Currently, Sweden is the biggest manufacturer of engineering products; it is also the largest supplier of iron ore, steel and paper. This trading instrument is relatively illiquid compared with major currency pairs such as: the EUR/USD, USD/CHF, GBP/USD, and USD/JPY. Therefore, when you forecast its further movement, you should primarily focus on the pairs quoted against the U.S. dollar.
If you want to trade cross currency pairs, it is necessary to bear in mind that brokers’ spread is often higher for cross rates than for majors. Thus, you’d better read and understand the trading terms offered by the broker before you start your cross rate trading.