2 Feb 2015
Limited upside for SEK for now – Nomura
FXStreet (Barcelona) - Research Analysts at Nomura, expect the Riksbank to embark on unconventional policies via either a QE or implementing negative rates, further anticipate staying short on SEK against USD and GBP.
Key Quotes
“Following the ECB’s decision to embark on sovereign QE, Riksbank responses will be key for EUR/SEK. As the Riksbank now also faces the zero policy rate bound, it will need to embark on unconventional policies to ease monetary conditions meaningfully.”
“We assign a 30% likelihood of unconventional policies being introduced (negative rates or/and QE) at the next meeting.”
“We also believe there is a 40% likelihood of unconventional policies being introduced by the July meeting.”
“If the Bank embarks on QE, and wants to match the pace of the ECB’s QE, we think it will need to purchase SEK15-22bn of assets per month.”
“Since the beginning of H2 2014, (non USD) G10 currencies have tended to underperform against USD into central bank meetings, and this trend is stronger for SEK. Even though the introduction of unconventional policies is not our main scenario yet, the recent dovish stances of other G10 central banks should encourage investors to position for SEK weakness into the next few meetings.”
“We still expect SEK to trade weakly among the G10 currencies in H1 this year and judge SEK short against USD and GBP as still an attractive position.”
Key Quotes
“Following the ECB’s decision to embark on sovereign QE, Riksbank responses will be key for EUR/SEK. As the Riksbank now also faces the zero policy rate bound, it will need to embark on unconventional policies to ease monetary conditions meaningfully.”
“We assign a 30% likelihood of unconventional policies being introduced (negative rates or/and QE) at the next meeting.”
“We also believe there is a 40% likelihood of unconventional policies being introduced by the July meeting.”
“If the Bank embarks on QE, and wants to match the pace of the ECB’s QE, we think it will need to purchase SEK15-22bn of assets per month.”
“Since the beginning of H2 2014, (non USD) G10 currencies have tended to underperform against USD into central bank meetings, and this trend is stronger for SEK. Even though the introduction of unconventional policies is not our main scenario yet, the recent dovish stances of other G10 central banks should encourage investors to position for SEK weakness into the next few meetings.”
“We still expect SEK to trade weakly among the G10 currencies in H1 this year and judge SEK short against USD and GBP as still an attractive position.”