EUR/SEK still a ‘sell on rallies’ – TDS

FX Strategists at TD Securities recommended selling the cross on occasional upticks.

Key Quotes

“While both central banks forecast a chance of a rate cut, we think neither will pull the trigger. Swedish policy remains a function of SEK, and by extension the ECB, and their forecast is a threat not a commitment (we see no more QE either). Norway inflation is running far below the Norges Bank's target, but they will remain on hold as financial stability risks remain elevated, especially in the housing market”.

“Two-way risks are likely to prevail vs the EUR for now so we are prepared to pursue opportunities on both sides. We prefer to sell EURSEK on rallies despite a still-dovish Riksbank as the Swedish economy continues to outperform. A rebound in oil prices would support downside in EURNOK, but lagging inflation pressures in Norway mean the Norges Bank will stay dovish”.