EUR/SEK could grind lower to 9.30 in a year’s view – Danske Bank

Senior Analyst at Danske Bank Stefan Mellin believes the Swedish Krona could appreciate towards the 9.30 region in a 12-month view.

Key Quotes

“The Riksbank surprised with a QE taper extension and the minutes confirmed a soft tone. We cannot rule out further stimulus if inflation disappoints but we do not expect it. It seems to us that the Riksbank is getting better traction in the currency market than the money market, while the krona is arguably weaker but the money-market curve is still steeper than the Riksbank path”.

“As long as the Riksbank and ECB stay soft, it is likely to hinder any meaningful rebound in the SEK. Still, we think EUR/SEK has gone a bit too far and, given the underlying macro picture and valuation, we maintain a modest fall in the EUR/SEK forecast. We keep 1M at 9.60 and raise 3M to 9.50 (was 9.40), 6M to 9.50 (9.30) and 12M to 9.30 (9.20)”.