Scandis: Back and forth – Nordea Markts

Analysts at Nordea Markets explain that last week was another week of Riksbank backtracking, on the heels of the SEK sell-off that they created by writing that "it is important that the krona exchange rate develops in a way compatible with inflation stabilising close to the target" at the April meeting.

Key Quotes

“The Krona is still 1.5% weaker than anticipated by the Riksbank in April, indicating that EUR/SEK can drop to 10.15 without any notable bearing for the Riksbank (given how they have sounded in recent weeks).”

“In Norway, the Q1 GDP report was almost completely in line with Norges Bank’s projection of 0.6% growth q/q in the mainland economy, bolstering the case for a rate hike in September. But even despite higher oil prices and prospects of a Norwegian rate hike, we tend to think that it is too early to expect the next round of NOK strengthening around the corner.”

“June is usually a very weak season for NOK, so we rather consider opportunities to go short NOK in a week or two from now.”