EUR/SEK still looks south – Danske Bank
|In view of Senior Analyst at Danske Bank Piet Christiansen, SEK is expected to gather further traction in the next months.
Key Quotes
“EUR/SEK temporarily moved below 10.30 on Friday driven by a general sell-off in EUR and decent retails sales figures from Sweden. There is no doubt the hawkish tweak of the Riksbank rhetoric has changed the appetite toward the SEK, and we still see potential for additional SEK appreciation in the coming months targeting 10.20 in 3M ahead of a possible rate hike in December (our call)”.
“However, we expect the rate hike from the Riksbank in December to a be one-and-wait, which leaves the repo rate at -0.25% for longer than the Riksbank plans, for the most part of 2019 at least. This should limit the downside potential in EUR/SEK over the medium-term horizon”.
“We target 10.20 by the end of 2019, and given the balance of risk for the SEK (not least given the political situation in Sweden), we recommend taking advantage of the recent SEK appreciation to build up 2019 hedges via Knock-in Forwards, which secures a worst-case rate while maintaining some profit potential in the event of a decline in EUR/SEK”.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.