EUR/SEK to move higher medium-term, 10.40 mark is in its sights – Danske Bank

For the Swedish krona, focus remains on the business cycle, risk sentiment and a Fed, where economists at Danske Bank believe that a gradually stronger USD will help pushing EUR/SEK higher over the medium-term.

EUR/SEK seen at 10.40 on a 12-month view

“Focus remains on the global business cycle, risk sentiment and a less accommodative FED, where our baseline is that a gradually stronger USD will help pushing EUR/SEK higher over the medium-term.” 

“Furthermore, the steep drop in Swedish inflation will keep any monetary policy tightening at bay – and Board members alert to any premature appreciation of the krona. While there are always risks associated with Riksbank announcements, our best guess is that the upcoming one will not be a major market mover.” 

“We raise our 1M forecast to 10.20 (10.10) and keep 3, 6 and 12M intact at 10.20, 10.30 and 12M 10.40.”

“If the RB pencils in a hike at the end of the horizon (not our baseline), it would weigh on EUR/SEK. Conversely, if even a small probability for a cut is pencilled in (unlikely), it would send EUR/SEK substantially higher.”