Morten Helt, Senior Analyst at Danske Bank, noted the cross still points to extra downside in the near term.
“With the outlook of the next move higher in NOK we yesterday took (a small) profit on our short NOK/SEK position. Initially, we wanted to await the Swedish inflation print today before closing the position as our Swedish economists had an above-consensus call for the release”.
“Meanwhile, looking at the details of the Norwegian and Danish inflation prints, there is now downside risk to their estimates and therefore we prefer to take profit now. We book a small profit of 0.1%. More fundamentally on the SEK, we cannot rule out more near-term EUR/SEK downside but emphasise that we still think markets underestimate the negative growth implications of lower housing investments as well, as we think the Riksbank’s inflation projections are too optimistic, especially for next year. We therefore look to fade any EUR/SEK move lower on a 3-6M horizon”.