Stefan Mellin, Senior Analyst at Danske Bank, expects the Riksbank to hike rates in December or February with the subsequent appreciation of the Krona in the near term.
Key Quotes
“We have a 3M bullish view on the SEK based on the Riksbank delivering its first hike in seven years. Our 3M EUR/SEK target is 10.20 (unchanged)”.
“Near term, we continue to see upside risks based on political events in Sweden and abroad. On the other hand, the Riksbank’s October meeting could have the opposite effect”.
“On balance, we merely roll the 1M forecast lower to 10.40 (10.50). Taking into account the latest batch of higher-than-expected inflation numbers and how these feed into the inflation forecast, one could argue that pricing is somewhat too dovish – more so when it comes to pricing further out. Hence, we opt to lower our 6M and 12M forecasts to 10.10 (10.20) and 10.10 (10.30), respectively”.
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