SEK keeps the bearishness intact so far – Danske Bank
|Senior Analyst at Danske Bank Stefan Mellin noted the negative stance on the Swedish Krona remains intact so far.
Key Quotes
“We acknowledge that EUR/SEK is at elevated levels. However, we believe that long-term-misalignment and mean-reversion calls suggesting that the cross is close to a substantial correction are premature. This would, in our view, require a clear fundamental trigger, which we cannot really see”.
“On the contrary, we have become more convinced that the Riksbank needs to back off from planned rate hikes and a housing-fuelled economic slowdown - the building-blocks for our long-held bearish view on the SEK and to a large extent (together with risk aversion) the reasons why EUR/SEK has (b)reached our Q2-Q3 10.30 target already”.
“Our short-term models suggest that EUR/SEK is overbought. We see room for shallow corrections, but argue that the cross is still a buy on dips. On balance, we raise the 1M forecast to 10.40 (10.20), 3M and 6M to 10.50 (10.30) and 12M to 10.20 (10.10)”.
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