Long EUR/SEK – Deutsche Bank

Shuaib Chowdhary, Macro Strategist at Deutsche Bank, recommends to go long on EUR/SEK as their G-10 trade idea of the week by keeping a target of 9.80 and maintain a stop loss of 9.47 while the entry point being 9.55 levels.

Key Quotes

“We see further upside potential for EUR/SEK.  Although Swedish economic surprises have fallen recently, the mean-reverting nature of this data suggests much further room for downward surprises.  Swedish economic surprises track short-run EUR/SEK performance very well and therefore the potential for further downside moves should weigh negatively on SEK.  The Swedish GDP print this week (consensus 2.3% YoY) presents a potential risk event and so current EUR/SEK levels are an attractive entry point on a risk-reward basis.”  

“EUR/SEK is also cheap to real rate differentials, which makes the pair attractive on this basis.”

“Finally, our CORAX positioning data suggests that although leveraged fund SEK positioning is short, these shorts have been pared in recent weeks, providing scope for further downward pressure on SEK.”