EUR/SEK poised for extra upside – TDS

According to FX Strategists at TD Securities, the cross is expected to edge higher on the back of a vigilant Riksbank.

Key Quotes

“While record-high data surprises in Sweden have markets excited about rate hikes, we think that the Riksbank will look through the recent strength in inflation, which has mostly been due to methodological changes, and start pushing back against currency strength. In Norway, we think that the housing market correction in Oslo will garner more attention as we move into the autumn, as units for sale are sitting at all-time highs”.

“Sweden's robust growth profile has been enough to fuel a strongly-bullish outlook, but a rapid of appreciation of the currency in such short order - above and beyond the Riksbank's forecasts - suggest strong resistance from the central bank, leaving tactical EURSEK upside, for now. We look to eventually fade this move from a strategic perspective. Meanwhile, a sidelined Norges bank leave us biased to renewed EURNOK upside”.