EUR/SEK remains bid, NOK keeps its shine – Danske Bank

Jens Pedersen, Senior Analyst at Danske Bank, expects the Swedish Krona to remain on the defensive in the near term.

Key Quotes

“In the Scandies, EUR/SEK remains bid following the dovish outcome of the Riksbank meeting last week. We find it difficult to see the bearish sentiment in SEK turn around near-term and forecast EUR/SEK at 9.60 in 1M, but also note that our interest-rate model has fair value closer to 9.50”.

“The domestic case for a stronger NOK has been dominated by challenging externals and in the very near-term it is difficult to identify obvious triggers for a reversal. In the medium term, the latest NOK weakness should be welcomed by Norges Bank as it reduces t he risk of inflation dropping further whilst supporting growth. As a result, we highlight a cautious tactical NOK view but emphasise the strategic attractiveness of building up NOK exposure on the back of not least valuation and real interest rates”.