Aila Mihr, Analyst at Danske Bank, noted the fair value for the cross should be around the 10.25 area.
Key Quotes
“The Riksbank Jansson’s comments were a bit all over the place yesterday: on the one hand he said that SEK is ‘not the motor’ for inflation; on the other that the krona is ‘important’ for inflation. Somewhat contradicting but maybe one should interpret him like this: the krona cannot be the motor for inflation in the longer term, though in the short term (now) it is important; at least, the latter rhymes with the Riksbank’s normal phrase, i.e. ‘the krona must not appreciate too fast’.
“The knee-jerk reaction to the plethora of flashes was to send EUR/SEK lower; this made sense as it was less cautious wording than we have been used to from the ‘SEK tamer in command’. That said, it would be premature from their point of view to let go of the krona, given that underlying inflation is still muted. Our short-term models suggests that EUR/SEK is close to fair value at around 10.25”.
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