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It could be that Sweden is following WHO’s best practices in fighting the covid-19 outbreak. However, the country’s strategy still differs sharply to that of Hungary, Israel, Italy, Japan, etc. Analysts at Nordea have a negative outlook for the SEK as the EUR/SEK pair is trading at 10.5572.

Key quotes

“Just as the containment of the virus is seemingly failing, EUR/SEK has (finally) failed to stay contained within its recent range. A lot of people will return from their winter leaves to the Italian Alps and what not- how many will be infected? Those headlines might be SEK-negative in coming weeks.”

“There must be rapidly growing risks that the outbreak will meaningfully affect manufacturing supply chains in the coming months, which we suspect may be negative for the SEK. It’s also the case that the Riksbank could re-cut rates to negative territory and launch more bond purchases later this year.” 

“In short, we prefer to stay away from the SEK, and buy EUR/SEK on dips.”