EUR/SEK seen rangebound for the time being – Danske Bank

Pablo Piovano FXStreet

Mikael Milhoj, Senior Analyst at Danske Bank, believes the Swedish Krona should remain in a consolidative mode vs. its European peer in the near to medium term.

Key Quotes

“In Sweden, CPIF inflation is likely to be above 2% for the third consecutive month but we doubt it will have much effect on the Riksbank’s reaction function at this stage. In our view, the Riksbank will remain happy to be ‘behind the curve’, i.e. mirror the ECB and hence we expect a muted EUR/SEK reaction if our call proves right”.

“In terms of the inflationary outlook in Sweden, our CPIF inflation forecast is above the Riksbank’s almost every month until August next year. Such a series would dampen the Riksbank’s plan to start raising rates sometime after next summer (or earlier)”.

“However, the exit plan will also be a function of the ECB (which is unlikely to hike until 2019) and market pricing where the Riksbank does not want to see unwarranted/premature tightening of financial conditions. As a result, we therefor e still see EUR/SEK as a near-term range play”.

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

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