FXStreet (Edinburgh) – Analysts at Danske Bank assessed the probable scenarios for the Swedish krona in the upcoming weeks.
“Given the events in Greece and the possible spill-over effects on the Scandi currencies, the focus on the Riksbank meeting on 2 July has increased. Our base case is that the Riksbank stays on hold this time”.
“But still we believe that the current situation, above all, will have a negative effect on the EUR and thus weigh on EUR/SEK. Note that a strong risk-off reaction in global equity market will tend to work in other direction for EUR/SEK”.
“While aggressive ECB easing will tend to weaken the EUR, the Riksbank is trying to mitigate any upward pressure on the SEK in order to ensure that inflation moves higher”.
“The Riksbank has been very clear that it will not stand passively by if EUR/SEK falls rapidly. We do not know the exact pain threshold for the Riksbank – but 9.00 as mentioned above could be a good guess. Actually we are not convinced that there is a certain level at which they would step in – but it very much depends on the pace of SEK appreciation. When the Riksbank surprised in March, EUR/SEK traded at 9.17 after having fallen rapidly from 9.60 to 9.10”.
Analysts at Danske Bank assessed the probable scenarios for the Swedish krona in the upcoming weeks…
(Market News Provided by FXstreet)