Rabobank's Senior FX Strategist Jane Foley discusses EUR/SEK, noting Sweden’s resilient economy, stronger-than-expected GDP and a hawkish shift at the Riksbank. Foley highlights fiscal support measures, low national debt and the prospect of a November rate hike as supportive for the Swedish Krona (SEK). Foley forecasts EUR/SEK moving back to 11.00 on a 3‑month horizon.
"On the back of better-than-expected monthly GDP data and a hawkish tone from some Riksbank officials, the market has fine-tuned its expectation of interest rate hikes and is fully priced for a 25-bps tightening on a 3-month view."
"Last month, Seim indicated that she would support a rate rise at the Riksbank’s November policy meeting, while Governor Thedeen suggested that it would be “reasonable” to raise the policy rate."
"In a speech last week, Thedeen stated that “I said that it may be reasonable to raise the policy rate as early as in November. I also considered the forecast for next year, which indicates further increases, to be reasonable yet associated with considerable uncertainty.”"
"In view of the combination of a sound fiscal stance, a resilient economy and the prospect of a November rate rise from the Riksbank, we see scope for the SEK to win back some ground vs. the EUR."
"Near-term the 50-day sma in the EUR/SEK11.16 area is acting as support, a break lower may signal a move to the 11.07 area. We forecast a move back to EUR/SEK 11.00 on a 3-month view."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)