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Senior Analyst at Danske Bank Stefan Mellin sees the Riksbank raising rates in December and the SEK picking up pace in the following months.

Key Quotes

“We now expect a 25bp Riksbank hike in December (previously 10bp in July 2019). This would be the first hike in seven years – a landmark in itself – and is not fully priced in. As such, it should be SEK supportive”.

“However, we expect it to be a ‘one and done’, which leaves the repo rate at -0.25% for longer than the Riksbank plans, for most of 2019 at least. Consequently, we revised our outlook for EUR/SEK and thus see the cross at 10.20 in 3M, 10.20 in 6M and 10.30 in 12M”.

“Near term, we expect the difficult parliamentary situation to keep EUR/SEK elevated and, therefore, we leave the 1M forecast at 10.50. We acknowledge the risk that Sweden is heading for an extra election and if this happens, our 3M target is probably too low”.

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