SEK: Still difficult to turn bullish – Danske Bank
|According to Danske Bank analysts, the sizeable rate gap versus the USD has held back commercial and investors’ demand for the SEK and fuelled carry trades where the SEK has been the funding currency.
Key Quotes
“As the Fed enters an easing cycle, these flows may abate, which in turn could support the SEK, providing downside risk to our EUR/SEK forecast.”
“As international central banks soften, the scope for the Riksbank to keep its relatively upbeat rhetoric is shrinking by the day. That said, we do not expect any major policy revisions at the July meeting. A pronounced global risk-off environment could send the SEK down the drain, though partially balanced by investors scaling back carry positions.”
“Significant Fed cuts (more than we pencil in) may send USD/SEK (and EUR/SEK) lower than suggested by our forecasts. We see EUR/SEK at 10.70, 10.80, 10.90 and 11.00 in respectively 1M, 3M, 6M and 12M.”
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