EUR/SEK upside seems overdone – Danske Bank

Jens Pedersen, Senior Analyst at Danske Bank, sees the Swedish Krona retaking its upside bias in the next months.

Key Quotes

“After a test of 9.60, EUR/SEK edged lower again on Wednesday despite a lower PMI and the Riksbank Minutes being slightly on the soft side”.

“The Minutes did not perhaps offer a lot of 'news' but one observation was Mrs Skingsley did not argue for a smaller easing bias, leaving only two members, Mr Ohlsson and Mr Flodén, in that camp”.

“Meanwhile, the three-headed majority is not anywhere near changing course before inflation is on firm ground. So, unless inflation surprises on the upside, the krona is not likely to get much support from the Riksbank”.

“However, the SEK is not only about monetary policy. The solid macro-economic backdrop with decent growth momentum and weak SEK levels to start with suggest, in our view, that the recent spike in EUR/SEK was overdone. As long as the move lower is 'gradual', which we think, it is likely to be accepted by the Riksbank”.