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Senior Analyst at Danske Bank Stefan Mellin keeps the bearish outlook on the Swedish Krona for the time being.

Key Quotes

“We remain bearish on the SEK after the July inflation numbers, which above all showed that core inflation at 1.3% undershot the Riksbank forecast. CPIF was one-tenth higher than forecast but is of less importance, as the Riksbank is likely to see through the energy noise”.

“We are comfortable with our call of no hike this year and see EUR/SEK as a buy on dips. The SEK is not only about monetary policy and macro though but also about poor global risk sentiment and a messy Swedish general election”.

“In our view, this is a cocktail for heightened FX volatility and a headwind for the SEK. We see EUR/SEK at 10.50 (previously 10.40) in 1M, 10.60 (previously 10.40) in 3M, 10.50 (unchanged) in 6M and 10.20 (unchanged) in 12M”.