23 Mar 2015
SEK expected to appreciated further – JP Morgan
FXStreet (Edinburgh) - Analysts at JP Morgan see the Swedish krona gathering further traction in the coming weeks.
Key Quotes
“The one central bank where there’s no evidence of any feedback loop from the currency is the Riksbank, which on the evidence of its intra-meeting rate cut and QE expansion can’t get enough currency depreciation even though only BRL and RUB have been debased by more than SEK over the past year”.
“We are doubtful however whether the Riksbank will get its way, at least not without additional rounds of easing”.
“The reason – investors widely regard this latest easing as unnecessary given the upturn in the growth and inflation cycles, and consequently doubt whether the
Riksbank can credibly hope to match the ECB’s pace of easing”.
“We position for renewed SEK appreciation through a 1-mo EUR/SEK put but cheapen the structure considerably with a relatively tight RKO”.
“The Riksbank will not abandon its increasingly explicit preference for a weaker currency without a further fight, so the lower EUR/SEK goes, the more likely the Riksbank will be to cut again and/or intervene”.
Key Quotes
“The one central bank where there’s no evidence of any feedback loop from the currency is the Riksbank, which on the evidence of its intra-meeting rate cut and QE expansion can’t get enough currency depreciation even though only BRL and RUB have been debased by more than SEK over the past year”.
“We are doubtful however whether the Riksbank will get its way, at least not without additional rounds of easing”.
“The reason – investors widely regard this latest easing as unnecessary given the upturn in the growth and inflation cycles, and consequently doubt whether the
Riksbank can credibly hope to match the ECB’s pace of easing”.
“We position for renewed SEK appreciation through a 1-mo EUR/SEK put but cheapen the structure considerably with a relatively tight RKO”.
“The Riksbank will not abandon its increasingly explicit preference for a weaker currency without a further fight, so the lower EUR/SEK goes, the more likely the Riksbank will be to cut again and/or intervene”.