SEK: Timing is key, but still expect gradual EUR/SEK depreciation – Nomura

The research team at Nomura suggests that strong fundamentals continue to underpin SEK, from stellar economic growth to being heavily undervalued.

Key Quotes

“The only thing missing is inflation to end the Riksbank’s ultra-loose monetary policy stance. At the last Riksbank meeting, the executive board extended QE purchases into end-2017, catching the market off-guard. We expect this to be the last policy easing the Riksbank will undertake this cycle; however communication of lift-off could take time. The Riksbank is clearly concerned around signalling hikes as long as the ECB maintains a dovish bias.”

“We expect the ECB to announce a taper in September, which can pave the way for more sustained SEK appreciation. We raise our forecast projections, but still expect EUR/SEK to move gradually lower from here, testing 9.30 by year-end and move further lower to 9.00 by end-2018.”