EUR/SEK stays a ‘sell on rallies’ – Danske Bank
|Arne Rasmussen, Chief Analyst at Danske Bank, recommends selling the cross on occasional upticks.
Key Quotes
“The biggest surprise yesterday came from Sweden where the Riksbank delivered a slightly more dovish package than priced in markets as most had expected an announced end to QE”.
“The announcement sent EUR/SEK to the upper end of what we consider to be the 9.45-9.65 trading range, and while the policy mix suggests a slightly stronger EUR/SEK in the short term, we see value in selling the cross from a tactical and strategic perspective on rallies towards the high end of the range”.
“Long term, we stick to the view that EUR/SEK should depreciate from a fundamental point of view. Moreover, we note that, the Riksbank is 1) tapering after all, 2) three of six board members voted against the QE extension and 3) they have lowered the probability of a 10bp cut from 60% to 30%”.
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