‘Normalisation’ is set to take place only very gradually in both the eurozone due to the outlook for a continued feeble inflation outlook and in Sweden, as a fragile housing market has become an additional argument for a cautious Riksbank, according to analysts at Danske Bank.
“We stress that it is when markets sense a shift away from central bank easing that currency moves occur – the actual delivery of hikes matters less. In our view, the ECB took the first step in this direction in June this year by removing the option of lowering rates further and starting to talk about reflationary (rather than deflationary) risks dominating.”
“In mid-2018, we think the ECB will unleash the next wave of ‘normalisation’ trades by announcing an end to QE later in the year. And, in the absence of a housing crash, we believe the Riksbank will continue to shadow the ECB for some time still.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these securities. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Forex involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.