EUR/SEK has moved lower, now trading in the 10.10-10.20 range. Economists at Danske Bank remain strategically bearish on the krona forecasting EUR/SEK at 10.50 in 12 months.
Near-term strength should fade out by year-end
“Weak risk sentiment and stronger USD would suggest clear upside risks to EUR/SEK from here. Despite this, the SEK has strengthened in recent weeks seemingly on the back of, in our view unjustified, contagion from the NOK”
“We remain strategically bearish on the krona on the back of deteriorating global growth momentum, fragile market environment, continued appreciation of the USD amid a hawkish Fed and too aggressive medium-term pricing on the Riksbank.”
“In the near-term, the SEK could get some temporary support if the Riksbank inserts a hiking bias at the November meeting, even though it is discounted already, and if the seasonal pattern holds true.”
“We lower our 1-3M estimates to 10.10 (10.20), while keeping 6M at 10.30 and 12M at 10.50.”
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