SEK still looks a bit fragile in the near term – ING

FXStreet Insights Team FXStreet

The Riksbank announces monetary policy today. Economists at ING analyze the Swedish Krona (SEK) outlook ahead of the decision.

Riksbank to resist dovish temptation

Consensus is firmly calling for a hold. We agree and markets are not pricing any move either.

Our view is that the Riksbank will revise the 2Q24 average rate projection to 3.95%, and have the year-end value around 3.50%. That would imply that a rate cut is possible in the first half of the year but is not a done deal.

We also expect the message to reiterate data dependency. Ultimately, that should sound like a moderate pushback against May/June cut pricing, although SEK is facing some rather soft momentum and the simple fact that the Riksbank would signal the chance of a cut in 1H could keep markets attached to some expectations of a May move.

EUR/SEK is, in turn, still facing some upside risks to 11.50-11.55 in the short term. But we like the chances of a sustainable move lower as early as April.

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FXStreet Insights Team

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