The analysis team at Deutsche Bank is recommending to go short on the EUR/SEK cross with the following parameters:
“Target 9.12, entry 9.5442, stop 9.70”
“Last week's strong inﬂation print may have been the ﬁnal catalyst for the Riksbank to turn outright hawkish in coming months. Three consecutive inﬂation prints above Riksbank projections suggest the labour market is tightening faster than the Riksbank expected, consistent with soaring vacancy rates and anecdotal reports of growing labour shortages. With the OIS curve pricing a 50% chance of a ﬁrst hike in April 2018, the market in our view still underprices a prospective hawkish turn by the September meeting, signalling greater tolerance for krone strength and a ﬁrst hike in 1H 2018. Net positioning in SEK is still light, and EUR/SEK is trading rich to the bund spread even before a Riksbank repricing.”
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