EUR/SEK: Poor growth readings and disastrous inflation data negative for the krona – Danske Bank
|Economists at Danske Bank see inflation and the economy as SEK-negative factors but as the Riksbank did not cut rates and is not likely to do so in the near-term, they forecast EUR/SEK at 10.60 in 1-3 months and 10.80 in 6-12 months horizon.
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Key quotes
“We no longer expect a cut from the Riksbank (RB) within a 12M horizon. However, we are worried that the RB’s inaction might lead to further de-anchoring of inflation expectation and might even cause a loss of credibility that will be hard to recover from.”
“Poor growth readings and the disastrous inflation data, with CPIF left in deflation territory and expectations at record lows, are both fundamental headwinds for the SEK, suggesting a positive bias in EUR/SEK.”
“We now see EUR/SEK at 10.60 in 1-3M and 10.80 in 6-12M.”
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