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The Riksbank kept its policy rate on hold, but expanded its QE program and cut the lending rate for banks. According to economists at Danske Bank, this decision supports the krona in the short-term and, therefore, they maintain its three-month forecast for the EUR/SEK pair at 10.50. 

Key quotes

“Yesterday, the Riksbank delivered a somewhat dovish surprise announcing that its QE program is expanded to SEK500 billion (up from SEK 300billion).” 

“Expansion was in the cards, but the consensus call was for the Riksbank to sit out the summer before acting. All else equal, this caps SEK downside near-term: we would not be surprised to see EUR/SEK test the 10.55-60 area in the coming days, if still contingent on global risk sentiment.” 

“As this is no real game-changer for the SEK, our medium-term SEK outlook remains neutral to slightly negative and we still target 10.50 in three months.”