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Analysts at Nordea Markets explain that last week was another week of Riksbank backtracking, on the heels of the SEK sell-off that they created by writing that “it is important that the krona exchange rate develops in a way compatible with inflation stabilising close to the target” at the April meeting.

Key Quotes

“The Krona is still 1.5% weaker than anticipated by the Riksbank in April,  indicating that EUR/SEK can drop to 10.15 without any notable bearing for the Riksbank (given how they have sounded in recent weeks).”

“In Norway, the Q1 GDP  report was almost completely in line with Norges Bank’s projection of 0.6% growth q/q in the mainland economy, bolstering the case for a rate hike in September.  But even despite higher oil prices and prospects of a Norwegian rate hike, we tend to think that it is too early to expect the next round of NOK strengthening around the corner.”

“June is usually a very weak season for NOK, so we rather consider opportunities to go short NOK in a week or two from now.”