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The Riksbank left its policy rate and QE programme unchanged.  The outcome did not produce a strong near-term signal for the SEK, but economists at TD Securities think it clears the way for the krona to express its bullish underlying fundamentals. EUR/SEK should head below 10 in the weeks ahead. 

Key quotes

“The Riksbank left its policy rate on hold at 0.00% and its QE envelope unchanged at SEK700 B, as had been fully expected. Looking more closely at the policy guidance on the repo rate, the Riksbank has forecast that it would be on hold at zero until at least through Q1 2024.”

“We think the SEK should start to trade on a more positive footing as it remains quite cheap relative to its fundamentals. This leaves us looking for a move below the 31 December lows around 10.01 in the weeks ahead.” 

“We think rallies in the cross should be sold with an eye on trendline resistance initiated at the March 2020 spike high which currently intersects around 10.32. Below 10.01, the next major attractor comes in at the three-year lows just under 9.75.”