EUR/SEK poised for further consolidation in the medium term – Danske Bank

Analyst at Danske Bank Thomas Rosenlund sees the Swedish Krona unlikely to appreciate further in the next months.

Key Quotes

“On a day where Swedish inflation surprised on the downside relative to consensus and the Riksbank’s projection, we only got a EUR/SEK rallying in yesterday’s session initially”.

“As previously seen, EUR/SEK spikes on data releases have opened up for selling interests and this time was no different”.

“To us, the inflation print is not enough to change our call on the Riksbank ahead of the 27 April meeting: we still pencil in an end to QE on worsening bond liquidity and that the Riksbank will counter SEK strength by flattening the rate path”.

“That, however, does not change the fact that the inflation outlook will prove more challenging than the Riksbank expects, not least as the industrial wage negotiations have provided little inflationary support”.

“As a result, we still see the downside potential for EUR/SEK as rather limited and consider the cross to be a tactical range play… also in coming months”.