SEK now looks to the Riksbank – Danske Bank
|Mathias Mogesen, Analyst at Danske Bank, noted the Swedish Krona remains vigilant on the Riksbank meeting due next week.
Key Quotes
“While EUR crosses were bid yesterday following Draghi’s comments, EUR/SEK came down later in the day and SEK markets are starting to look towards the Riksbank next week”.
“While we expect an unchanged repo rate and continued bond buying, focus will be directed towards whether the current 3bp easing bias is kept in place. Are there reasons to remove it? Yes: the latest inflation readings, Prospera inflation expectations and diminished global growth risks”.
“In addition, the ECB and Norges Bank have both moved from easing to being neutral. Hence, we would not be surprised if the Riksbank followed suit. It is not a done deal though as we know that the three-headed majority has consistently erred on the side of caution and may continue to do so”.
“If they remove the bias and in addition to that sound sufficiently hawkish , EUR/SEK should definitely test the lower end of the recent range (9.70), and if they keep it in the upper end (9.80), it will be challenged”.
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