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Analysts at Danske Bank assessed the recent Riksbank event and the prospects for the Swedish currency.

Key Quotes

“Broadly speaking, the decision was quite undramatic, albeit that Flodén’s reservation on the repo rate path gave it a slightly hawkish tilt”.

“In the near term, expectations of a Q4 rate hike will probably be kept alive and as such lend some support to the SEK”.

“The Riksbank adjusted its KIX forecast in a very traditional way, meaning that it still assumes that the krona will appreciate over the forecast horizon. In particular, the KIX forecast indicates it assumes a 3.3% SEK appreciation until Q4 (116.1), which would correspond to EUR/SEK moving to 10.10, all else being equal”.

“We expect EUR/SEK to continue to edge lower toward 10.20 in the coming weeks, a potential buying opportunity if we are right on the Riksbank delaying the first hike”.