EUR/SEK: Krona to face a challenging autumn – Danske Bank

FXStreet Insights Team FXStreet

EUR/SEK has moved lower but continues to trade in the recent 10.15-10.25 range. With the peak in the global industrial cycle as well as fading support from equities, economists at Danske Bank see headwinds for the export-exposed and pro-cyclical Swedish currency. They expect a weakening of SEK in the medium-term and forecast EUR/SEK at 10.50 in 12 months.

A laughing dove errs on the side of caution

“EUR/SEK remains in an orderly uptrend channel, which we expect will stick in the coming quarters.”

“With the peak in the global industrial cycle, we see headwinds for the export-exposed and pro-cyclical Swedish currency. For risk-sensitive currencies like the SEK, slower growth also means fading support from equities.”

“The Riksbank made clear that they will err on the side of caution. We deem outright and relative pricing on the Riksbank as being too aggressive. If markets align, relative rates momentum and carry suggest major SEK crosses will move higher.”

“We leave the shor-tend forecast profile unchanged at 10.20 in 1M, 10.20 in 3M, 10.30 in 6M and raise 12M to 10.50 (from 10.40) on the account of a stronger USD.”

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

USD/JPY eyes August swing low, near 155.20 ahead of US NFP

USD/JPY retests the August monthly swing low during the Asian session on Friday as a more hawkish repricing of BoJ rate-hike bets and a suspected intervention continue to underpin the Japanese Yen. Meanwhile, the US Dollar is seen consolidating the previous day's heavy losses amid soft US bond yields, further weighing on the currency pair as traders keenly await the US NFP report.

AUD/USD consolidates above 0.7200; US NFP awaited

AUD/USD holds steady above 0.7200, near its highest level since mid-May, as bulls await the US NFP report for more cues on the Fed's policy path before placing fresh bets. Meanwhile, the recent decline in US bond yields keeps the US Dollar depressed near its lowest level in over a week and acts as a tailwind for the Aussie amid the RBA's hawkish tilt.

Gold tumbles as blockbuster US NFP lift US Dollar, Treasury yields

Gold (XAU/USD) falls sharply on Friday, snapping a two-day recovery after the US Nonfarm Payrolls (NFP) report surprised strongly to the upside. The metal briefly climbed above $4,500 on Thursday, gaining nearly 2%, but has since erased a large part of that advance.

Crypto’s $638 million buyback boom may not be as bullish as it looks

Decentralized Finance (DeFi) protocols reportedly spent $638 million to buy back their native tokens in August, up 17% from a year earlier. On the surface, the buyback trend suggests the cryptocurrency industry is maturing fast, adopting one of Wall Street’s oldest tools to bolster valuations and distribute revenue. The headline becomes less impressive once the number is opened up.

Why hawkish Bank of Japan expectations aren't enough to sustain the Japanese Yen rally

The Japanese Yen (JPY) experienced a sudden burst higher after falling back below the 160.00 psychological mark against the US Dollar (USD) earlier this week amid a more hawkish repricing of Bank of Japan (BoJ) rate hike expectations.

Diesel’s record $100 warning: The oil shock hiding in plain sight

The Oil market may look calmer than it did a few months ago, but diesel is sending a very different message. The US diesel crack spread, the premium of ultra-low sulphur diesel futures over WTI, recently surged above $100 per barrel for the first time, reaching an intraday record of just over $102.00.