SEK’s outlook appears constructive – Danske Bank

Jakob Christensen, Chief Analyst at Danske Bank, assessed the prospects for the Swedish Krona in light of the upcoming Riksbank meeting.

Key Quotes

“For the SEK, the week is absent of any economic releases of significance. Hence, the currency may trade on the general risk sentiment, which has recently provided some momentum to SEK”.

“The market may also start to look forward increasingly to the Riksbank meeting on 15 February, where the current easing bias may be reduced as promoted by the three December policy committee dissenters”.

“Recent data, not least inflation expectations, may convince some of the more proactive members to accept less biased policy signals. The market could use that as an excuse to add to short EURSEK”.

“The ‘RB is done’ story is key as to why we are strategically bullish on the SEK, but we have also highlighted that, in our view, market pricing on a one-three year basis on how rapidly it will hike is getting somewhat stretched. Hence, we are reluctant to go short here and prefer to await a better entry level”.